Cuba Banking Sector Compliance Issues Spark Regulatory Overhaul

Washington D.C. - New Regulations Aim to Increase Support for the Cuban People

The Department of the Treasury’s Office of Foreign Assets Control (OFAC) has announced significant changes to its Cuban Assets Control Regulations (CACR). The amendments, which take effect on May 28, 2024, are designed to promote internet freedom, support independent entrepreneurs, and expand access to financial services for Cubans.

Key Changes

• Authorized Internet-Based Services: OFAC is authorizing a range of internet-based services, including:
  • Social media platforms
  • Collaboration tools
  • Video conferencing
  • E-gaming
  • E-learning platforms
• Cloud-Based Services: U.S.-based companies can now provide cloud-based services to support these authorized activities.
• Expanded Definition of “Independent Private Sector Entrepreneur”:
  • Small private businesses with up to 100 employees are now included in the definition.
  • Cooperatives with up to 100 employees are also permitted.

Financial Services and Remittances

• U.S. Bank Accounts for Cuban Nationals: Independent private sector entrepreneurs can now open and maintain U.S. bank accounts, allowing them to conduct authorized transactions remotely.
• Reinstatement of “U-turn” Transactions:
  • Funds transfers can originate and terminate outside the United States without involving U.S.-based parties.
  • Intended to facilitate remittances and payments for authorized Cuban private sector activities.
• Processing Previously Blocked Funds Transfers: U.S. banks are now allowed to process previously blocked “U-turn” funds transfers.

Background

These changes come as part of the Biden-Harris Administration’s effort to increase support for the Cuban people, following a policy announcement in May 2022.

Resources

The updated regulations and frequently asked questions (FAQs) are available on OFAC’s website.