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In a first, Cuba's private business owners will be able to use US banks, Treasury says

Nora Gámez Torres, Miami Herald on

Published in Business News

The Biden administration will finally allow Cuban independent entrepreneurs to open bank accounts in the United States remotely from the island, among other measures to support the private sector in Cuba that were halted for months due to objections from Congress.

Senior administration officials told reporters on Tuesday that the Treasury Department crafted new regulations to modify the decades-old embargo on the island. The new regulations will allow private business owners in Cuba to open U.S. bank accounts and conduct authorized transactions, “including through online payment platforms,” removing a significant hurdle for the private enterprises.

The embargo imposed on Cuba in the 1960s cut the island off from the U.S. banking system. Currently, Cubans visiting the U.S. can open a bank account here, but they cannot access their money once they return to the island. The embargo restrictions were initially aimed at the Cuban government, but they are now limiting private entrepreneurs, who must come up with creative and expensive ways to pay for imports from abroad.

A senior administration official said that it was “essential” for the Biden administration to make sure the private sector continues to expand on the island.

Other new measures announced Tuesday include authorizing U.S. companies to provide internet services such as videoconferencing, e-learning, automated translation, I.T. managing services and cloud-based services to the private business owners.

The changes would make it possible, for example, for Cuban software developers to have their apps available for download on the Apple or Google app stores.

The Treasury Department will also reverse a Trump-era measure prohibiting U.S. banks from processing transactions involving Cuba and banks in third countries, known in the banking industry as “U-turn transactions.” That will particularly benefit companies like Western Union, which sends remittances in dollars to Cuba.

 

Treasury will update its definition of what constitutes an “independent private sector entrepreneur” to include owners of the Cuban enterprises so that they can benefit from the new policy initiatives.

The new regulations will also include restrictions on U.S. companies doing business or providing services to entities owned by the Cuban government or the military. One administration official said Tuesday that any private Cuban company whose owners include someone on Treasury’s list of “prohibited officials of the government of Cuba” will not be able to benefit from the new rules. That list includes top Cuban officials, among them members of the Council of Ministers; Council of State; the National Assembly; the Supreme Court; members of the military and the Ministry of Interior, and senior officials in all ministries. It also includes lower-level officials in the provincial assemblies, the Committees for the Defense of the Revolution, the leaders of the government-controlled unions and editors in state media.

The Cuban private sector has rapidly expanded since it was first allowed in 2021, and there are now more than 10,000 small and medium enterprises, employing a third of all Cuban workers. Because the government is almost bankrupt amid a severe economic crisis, the private sector has taken roles previously unthinkable in a communist island that once banned all private property. These enterprises, known by their acronym mipymes in Spanish, have become major importers of food and other necessities in the midst of the widespread scarcity. They have become significant suppliers of the flour that state-owned bakeries need to produce bread for the public.

The Treasury policy package was ready to go in September, Biden administration sources told the Miami Herald at the time, describing in detail what was expected to be announced. But the new regulations were caught up in bitter congressional fights about the federal budget and faced the staunch opposition of Miami Republican Rep. Mario Diaz-Balart, who chairs a subcommittee overseeing the State Department budget.

Díaz-Balart and other Cuban-American members of Congress have voiced concerns that because the private sector is under government control, there is no legitimate free enterprise on the island. They also argue that all private enterprises are owned or controlled by people with ties with the government and the ruling elite.

While independent journalists and activists have found a few enterprises owned by relatives of government officials, several business owners who spoke to the Herald have denied having ties with government officials and rejected that characterization.


©2024 Miami Herald. Visit at miamiherald.com. Distributed by Tribune Content Agency, LLC.

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