Biden Administration Eases Restrictions to Support Cuban Entrepreneurs

The Biden administration has announced new measures aimed at supporting Cuban entrepreneurs by allowing them to open and manage US bank accounts. This initiative is part of the administration's 'support for the Cuban people' policy, which reverses some of the restrictions imposed by the previous Trump administration.

The US Treasury Department has authorized US banks to handle accounts for Cuban private business owners. This includes access to online payment systems like Venmo and PayPal, facilitating international transactions and enhancing the financial infrastructure for Cuban entrepreneurs.

Why this matters: This policy change has significant implications for the Cuban economy and could lead to increased economic opportunities for Cuban entrepreneurs. The success of this policy could also influence US-Cuba relations and impact the country's overall economic development.

The new policy aims to support the Cuban private sector, which has been constrained by the comprehensive economic embargo and the country's designation as a state sponsor of terrorism. Despite these challenges, the administration expects the policy to significantly impact the Cuban economy.

However, several obstacles remain. US banks may be hesitant to act on the announcement because of the embargo and terrorism listing, which carry significant financial restrictions. Additionally, the upcoming US presidential election raises uncertainty about the policy's future, as a Republican administration could roll back these measures.

Cuban entrepreneurs must also overcome several logistical challenges, including obtaining a visa to travel to the US to open an account in person. Despite these obstacles, the Cuban government has stated that it will not block the new regulations on their end.

The new policy allows Cuban entrepreneurs to open US bank accounts, enabling them to access online payment systems and transfer money from third countries. This creates an infrastructure for Cuban private businesses, allowing them to open online stores, collect money abroad, and deposit it in a US bank.

Matthew Aho, a consultant with the law firm Akerman, highlighted the cautious approach banks might take: 'Banks will be extra cautious, but at the end of the day, we don't need 10 banks willing to do this. We need one.'

The amendments to the Cuban Assets Control Regulations (CACR) by the Office of Foreign Assets Control (OFAC) include expanded authorizations for internet-based services. These services encompass cloud-based services, social media platforms, collaboration platforms, video conferencing, e-gaming, and e-learning platforms.

OFAC has also replaced the term 'self-employed individual' with 'independent private sector entrepreneur,' which includes Cuban nationals who are not prohibited officials of the Government of Cuba or prohibited members of the Cuban Communist Party. This change broadens the scope of eligible entrepreneurs to include IT services, software development businesses, mobile application developers, and more.

The Biden administration's measures aim to support the growth of Cuba's private sector, which accounts for roughly one-third of the island's employment. By providing access to US banking services and online payment platforms, the administration hopes to create more economic opportunities on the island, thereby reducing irregular migration.

While the new measures present significant opportunities for Cuban entrepreneurs, the success of this policy will depend on the willingness of US banks to engage with Cuban businesses and traverse the complex regulatory environment.

Key Takeaways

• Biden admin allows Cuban entrepreneurs to open and manage US bank accounts.
• US banks can handle accounts for Cuban private business owners, including online payment systems.
• New policy aims to support Cuban private sector, despite embargo and terrorism listing.
• Cuban entrepreneurs can access online payment systems, transfer money from third countries.
• Success depends on US banks' willingness to engage with Cuban businesses amidst complex regulations.