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Cuba's entrepreneurs could open US bank accounts soon. Here's a look at how it would work

Nora Gámez Torres, Miami Herald on

Published in Business News

The Biden administration this week modified the regulations on the U.S. embargo on Cuba to allow private entrepreneurs on the island to open and manage U.S. bank accounts, a big bet to support the private sector on the island.

However, the new policy requires several steps before Cubans can take advantage, and several issues are still up in the air.

On Tuesday, the U.S. Treasury Department announced regulations that will authorize U.S. banks to handle accounts for Cuban private business owners. There is the possibility that online payment systems like Venmo or Paypal could offer their services to Cuban entrepreneurs too. A U.S. official discussing the new policy with reporters said the administration expects it to affect the Cuban economy significantly. But before that happens the administration, U.S. financial institutions and Cuban entrepreneurs must clear several hurdles.

Cuba is still under a comprehensive economic embargo and it is also on the U.S. list of countries that sponsor terrorism, so the big question is whether that will deter U.S. banks from acting on the announcement.

There’s also uncertainty about the upcoming U.S. presidential election and the possibility that a Republican administration would roll back the new measures.

For its part, the Cuban government said in a statement on Tuesday evening that it would not block the new regulations on their end.

 

The Miami Herald spoke to people knowledgeable about business practices in the U.S. and Cuba to unpack how the new policy would work in practice.

Will U.S. banks be on board?

When the Treasury Department changes regulations governing the U.S. embargo on Cuba to authorize a new activity, it does not mean that U.S. companies automatically jump to take advantage of it. The embargo is still in place, and Cuba’s being on the U.S. list of countries that sponsor terrorism carries significant financial restrictions.

When dealing with countries under sanctions, U.S. companies have to devote time and money to making sure they are complying with the regulations to avoid fines. In this case, banks will need assurances that even if the administration has authorized the accounts, they won’t run afoul of other sanctions still in place.

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