Small Business Opportunities Expand in Cuba Policy Change

On May 28, 2024, the Biden administration announced significant policy changes aimed at easing restrictions on independent small businesses in Cuba. This decision follows Cuba’s removal from the list of countries deemed uncooperative on counterterrorism by the State Department.

In its announcement, the Administration criticized the Cuban government for its economic challenges, citing recurring shortages of fuel, electricity, and food. It highlighted the perceived failure of Cuba’s communist system to meet basic citizen needs.

The new measures introduced by the Department of Treasury’s Office of Foreign Assets Control (OFAC) include several key provisions:

1. Authorized Internet-Based Services and Software: Cuban small businesses are now permitted to access expanded internet-based services such as video conferencing, social media, maps, e-learning, automated translation, and other online tools. U.S.-based entities can provide cloud-based services to these businesses, and Cuban-origin software and mobile applications can be exported from the U.S. to third countries.

2. Re-defining “Self-Employment”: The term “self-employed individual” is replaced with “independent private sector entrepreneur,” encompassing traditional business owners and private cooperatives owned by individuals. Prohibited Cuban officials and Communist Party members are excluded from benefiting under this redefinition.

3. Access to U.S. Bank Accounts: Cuban entrepreneurs can now open and remotely manage U.S. bank accounts, regardless of their physical location in the United States, Cuba, or elsewhere.

4. U-Turn Transactions: OFAC reinstates authorization for “U-turn” transactions, allowing funds transfers that both originate and terminate outside the U.S., involving parties not under U.S. jurisdiction and including Cuban interests.

OFAC has also released a FAQ document to assist stakeholders in understanding and implementing these policy changes effectively.