OFAC Significantly Amends Cuban Assets Control Regulations To Expand Support For The Cuban People

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The Department of the Treasury's Office of Foreign Assets Control ("OFAC") published a final rule in the Federal Register on May 29, 2024 amending the Cuban Assets Control Regulations...
United States Media, Telecoms, IT, Entertainment
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Washington, D.C. (June 18, 2024) - The Department of the Treasury's Office of Foreign Assets Control ("OFAC") published a final rule in the Federal Register on May 29, 2024 amending the Cuban Assets Control Regulations to further implement the Biden administration's policy announced on May 16, 2022, aimed at increasing support for the Cuban people.These amendments expand Cuban citizens' and independent private sector entrepreneurs' authorizations for internet-based services, financial transactions, and other activities that bolster internet freedom and support independent Cuban entrepreneurs and private sector growth. The most important amended categories of the regulation are the following:

  1. Expansion of Internet-Based Services Authorizations: The amended regulations expand the range of authorized internet-based services that can be provided to Cuba, including cloud-based services, social media platforms, video conferencing, e-gaming and e-learning platforms, and user authentication services. OFAC also clarified that the provision of training and services to install, repair, or replace items related to communications, or items used to develop software to improve the free flow of information and support private sector activities, is authorized. 31 C.F.R. § 515.578(a)(2). Additionally, OFAC now permits the exportation and reexportation of Cuban-origin software and mobile applications from the United States to third countries. 31 C.F.R. § 515.578(d)-(e).
  2. Redefinition of "Independent Private Sector Entrepreneur": OFAC replaced the term "self-employed individual" with "independent private sector entrepreneur" and expanded its definition to include a broader range of Cuban private businesses, such as private cooperatives and small private business entities of up to 100 employees, while excluding prohibited Cuban government officials and Communist Party members. 31 C.F.R. § 515.340. This change is intended to better target support to the Cuban private sector and ensure that sanctioned individuals do not benefit from the new authorizations.
  3. U.S. Bank Accounts for Independent Cuban Entrepreneurs: The amended regulations now permit U.S. banks to open and maintain accounts for independent private sector entrepreneurs in Cuba, as defined under the revised 31 C.F.R. § 515.340, for the purpose of conducting authorized or exempt transactions. 31 C.F.R. § 515.584(h)(2). This change will facilitate financial transactions and support the growth of Cuban private businesses.
  4. Reauthorization of "U-Turn" Transactions: OFAC has reinstated an authorization for "U-turn" transactions through the U.S. financial system, allowing funds transfers that originate and terminate outside the United States to be processed by U.S. banks, provided that neither the originator nor the beneficiary is a U.S. person. 31 C.F.R. § 515.584(d). This amendment aims to facilitate remittances and payments for authorized private sector transactions in Cuba while maintaining restrictions on transactions involving U.S. persons.
  5. Updated Reporting Requirements for Telecommunications-Related Transactions: The amended regulations update the reporting requirements for entities engaging in telecommunications-related transactions with Cuba, replacing the fax or mail submission of reports with an email submission to OFACReport@treasury.gov. 31 C.F.R. § 515.542(g). This change modernizes the reporting process and clarifies that the requirement applies to non-banking institutions providing telecommunications services.

In conjunction with the regulatory amendments, OFAC issued six new Cuba-related Frequently Asked Questions (FAQs 1174-1179) and amended eight existing FAQs (732, 736, 745, 748, 757, 769, 770, and 785) to provide additional guidance on the interpretation and application of these changes.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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