Biden Administration Allows Cuban Entrepreneurs to Open Accounts in U.S. Banks

Tuesday, May 28, 2024 by Amelia Soto

Biden Administration Allows Cuban Entrepreneurs to Open Accounts in U.S. Banks
Private business in Cuba - Image © CiberCuba

The United States will now permit private sector Cuban entrepreneurs to access accounts in American banks and conduct financial transactions from third countries (U-Turn transactions) to send remittances and other payments to individuals on the island. This decision is part of a suite of measures announced by the Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury, aimed at expanding the Biden administration's policy to support the Cuban people and Micro, Small, and Medium Enterprises (MSMEs), according to a document published in the Federal Register.

The change overturns a regulation from the Donald Trump administration that prohibited U.S. banks from processing transactions related to Cuba through third-country banks. This could allow companies like Western Union to restore their services from international offices. The U-turn transactions will enable banking institutions to process fund transfers involving Cuba, as long as they originate and terminate outside the U.S. and do not involve persons subject to U.S. jurisdiction.

This measure will improve the flow of remittances and payments for authorized transactions in the Cuban private sector, providing economic support to entrepreneurs and their businesses, according to OFAC. In Cuba, there are over 12,000 MSMEs since their authorization in 2021, some in collaboration with the state sector.

The measures approved by OFAC will take effect in one month and include the authorization of cloud-based services to facilitate internet communication and the expansion of services for the installation and repair of telecommunications equipment. Additionally, the export and re-export of Cuban-origin software and mobile applications from the United States to third countries will be allowed.

In January, the U.S. government had ruled out opening its banking system to Cuban MSMEs, but now it has made a significant modification in redefining the term "private sector independent entrepreneurs," excluding prohibited Cuban government officials and members of the Communist Party of Cuba.

This new definition includes not only self-employed workers but also cooperatives and other private businesses with up to 100 employees.

Implications of the New U.S. Policies for Cuban Entrepreneurs

This section addresses some frequently asked questions about the recent changes in U.S. policies towards Cuban private sector entrepreneurs.

What are U-turn transactions?

U-turn transactions allow banking institutions to process fund transfers that involve Cuba, provided they originate and end outside the United States and do not involve U.S.-jurisdiction persons.

How will these changes benefit Cuban entrepreneurs?

These changes will facilitate the flow of remittances and authorized payments, providing much-needed economic support to Cuban private businesses and their operations.

What other services are being authorized under the new measures?

The new measures also authorize cloud-based services to improve internet communication and expand services for telecommunications equipment installation and repair. Additionally, they allow the export and re-export of Cuban-origin software and mobile applications to third countries.

© CubaHeadlines 2024

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