New Moves by the Biden Administration on Cuba

to boost Internet accessibility and entrepreneurship

By Glenda Boza Ibarra (El Toque)

HAVANA TIMES – The Office of Foreign Assets Control (OFAC) of the US Department of the Treasury announced significant amendments to several embargo regulations on Tuesday, May 28, 2024. These amendments aim to expand Internet access and promote private entrepreneurship in Cuba.

The main goal of this action is to implement the policies announced by the Biden Administration on May 16, 2022, designed to increase support for the Cuban people.

The new amendments, which will take effect upon their publication in the Federal Register, update the Cuban Assets Control Regulations in effect since 1963.

The modifications range from the export of cloud-based services to the redefinition of independent entrepreneurs in the private sector.

Internet Access and Cloud Services

One of the measures announced by OFAC relates to Internet access from Cuba and seeks to improve connectivity and the flow of information between the United States and the island.

To this end, they will now facilitate access to modern technologies that allow open communication between citizens of both countries. US companies will be able to offer a broader range of cloud services to users in Cuba, which will enhance connectivity and access to digital tools.

The amendment also allows the export of technical support services and extends authorization for services such as installation, repair, and replacement of certain equipment, removing the previous requirement that these items be classified under specific export control parameters.

However, items subject to the Export Administration Regulations of commercial and dual-use (commercial and military/security applications) products must still be licensed or authorized by the Department of Commerce for export or re-export to Cuba.

Lastly, OFAC authorizes the export or re-export of software directly or indirectly from the US or by a person subject to US jurisdiction in Cuba.

Services included are chats and email, social networks, multimedia content sharing, web browsing, blogging, web hosting (as long as it is not for tourism promotion), collaboration platforms, video conferencing, e-learning platforms, among others.

It also authorizes the importation to the US and the export or re-export from the US to third countries of Cuban-origin software and mobile applications.

The measure opens new opportunities for the development and distribution of Cuban technology in the international market, allowing Cuban developers and software companies to access a global audience and enhance their marketing capabilities.

Redefinition and Support for the “Independent Entrepreneur”

OFAC has modified the definition of entrepreneurs in Cuba and expanded the category to include more forms of business organization in the Cuban private sector, albeit with some particularities.

The term “self-employed worker” has been replaced by “independent private sector entrepreneur,” and excludes Cubans who are “prohibited officials of the Cuban Government” and members of the Communist Party of Cuba.

The first group includes members of the Councils of State and Ministers, deputies, local government officials, the Committees for the Defense of the Revolution, the Cuban Workers’ Central, and other state ministries and agencies. Also excluded are officers of the Armed Forces and the Ministry of Interior, individuals holding positions in the State media, and members and employees of the Supreme Court.

In the case of Communist Party members, lawyer Mathew Aho (political consultant at the Akerman firm in Miami) specified that only members of the Political Bureau are excluded, not the rank and file members.

The term “independent private sector entrepreneur” includes self-employed workers; owners or employees of a private business or a sole proprietorship. It also encompasses cooperatives and other private businesses with up to 100 employees.

Cuban entrepreneur Katia Perez Sanchez celebrates that SMEs and self-employed workers are favored. “That is, people and teams without a business structure but who form a huge part of the entrepreneurial ecosystem and, in many cases, operate as small businesses although they are not legally recognized as such.”

The founder of the digital communication blog Penúltima Casa also states that the announced measures are “an essential step in strengthening the entrepreneurial sector, its autonomy, and its relationship with other businesses outside of Cuba.”

Opening Bank Accounts in the United States

The rumor that was not confirmed in September 2023 is finally corroborated: Cuban entrepreneurs will be able to open accounts in the United States to manage their finances and make international payments.

Previously, Cubans visiting the US could open an account in that country but could not use it from Cuba.

OFAC also reinstates the authorization of “U-turn” transactions, permitted during the Obama administration, and reversed by Trump. “U-turn” transactions allow transactions in US dollars when the customer or seller faces US government sanctions.

For example, a Cuban can make a transaction that passes through the US banking system as long as it does not start or end in a US bank.

OFAC also authorized the unblocking and return of any transfer that would have been authorized under the newly reinstated authorization.

A Cuban entrepreneur who preferred to remain anonymous explained to elTOQUE that he doubts US banks will immediately begin offering Cubans the possibility of opening accounts.

Lawyer Mathew Aho agrees with the entrepreneur because OFAC regulations do not require entities to start taking advantage of the rules.

Aho concluded that the policy towards Cuba is subject to US administrations, but for over a decade there have been “constant threads” of recognition and support for persons trying to become independent of the Cuban government.

Read more from Cuba here on Havana Times.