The United States opens banking to private Cuban businesses in a bid to boost the private sector

WASHINGTON – The United States on Tuesday lifted some financial restrictions on Cuba in a move aimed at boosting private businesses on the island.

These funds will enable independent entrepreneurs to open and access U.S. bank accounts online to support their businesses. They also include steps to make more online services available and to increase the ability of private companies to carry out certain financial transactions.

“These regulatory changes update and clarify authorizations to support Internet services to promote Internet freedom in Cuba, support independent Cuban private sector entrepreneurs, and expand access to certain financial services for Cubans,” the Department of Treasury said in a news release .

One key change will allow private Cuban business owners to open bank accounts in the United States and then access them online when they return to Cuba – something they couldn’t do before. The United States is again allowing so-called reverse transactions, in which money is sent from one country to another but routed through the United States.

“This restored authorization is intended to assist Cubans, including independent private sector entrepreneurs, by facilitating remittances and payments for transactions in the Cuban private sector,” the release said.

The Trump administration revoked authorization for U-turn transactions in 2019.

Cuban authorities disregarded this announcement. Johana Tablada, deputy director of the U.S. department at the Cuban Ministry of Foreign Affairs, said the steps taken were “limited” and would do little to ease the embargo or sanctions that have hurt Cubans the most.

“If these measures are serious and really intended to benefit society, even if they benefit part of the population, the Cuban government will not impede them,” Tablada told The Associated Press.

The Treasury Department’s updated guidance on Tuesday also changed the agency’s terminology to make clear that Cuban officials or banned members of the Cuban Communist Party did not benefit from changes targeting the country’s emerging private sector.

Cuba’s roughly 11,000 private companies account for roughly one-third of employment on the island, Cuban officials say.

The changes come as Cuba struggles with one of the worst economic and energy crises in its history. Cuban citizens are struggling with waves of power outages that have worsened in recent weeks and are frustrated by food shortages and inflation. Hundreds of thousands of people emigrated, many of them to the United States.

Caution prevailed in Cuba about the significance of these changes.

“This is an overall positive development, but there are many questions and answers that will need to be answered in the coming days,” Oniel Díaz, manager of AUGE, a Cuban corporate services company, told the AP.

Díaz said this could open up opportunities for Cuban businessmen who import everything from food to cars and, for example, help them make payments to suppliers. However, he expressed doubts whether banks would be willing to cooperate with businessmen on the island due to the perception of risk.

Díaz recalled that during the Obama administration there was a rule that allowed Cubans – albeit on a more limited basis – to open accounts in the U.S., but banks did not show “great enthusiasm” about it.

Tuesday’s announcement comes weeks after the United States removed Cuba from the State Department’s short list of countries it considers not fully cooperating against violent groups. However, the United States continues to list Cuba as a state sponsor of terrorism – a description that often discourages banks because they do not want to become the target of lawsuits in American courts.

Ties between the United States and Cuba were essentially frozen after the 1959 revolution that led to Fidel Castro coming to power and installing a communist government. There was a wave of nationalization of large companies, although some small private companies were allowed to remain open until 1968.

The United States imposed a full-scale economic embargo on Cuba in 1962 under President John F. Kennedy.

Only after the election of former President Barack Obama did relations begin to warm up, and in 2017 some restrictions were lifted. After Obama, then-President Donald Trump largely severed Obama’s cooperation with Cuba. In the twilight of the Trump administration, his government redesignated Cuba as a “state sponsor of terrorism” and imposed new sanctions on the country.

Cuba also slowly opened its economy to more private enterprises.

In 2010, President Raúl Castro launched reforms that expanded independent work for individuals but not companies. In 2021, Cuban authorities allowed the creation of the first small and medium-sized companies – called Pymes in Spanish.

___

Rodriguez contributed from Havana, Cuba.