Last week, the Biden administration announced several measures meant to reverse Trump-era restrictions on Cuban trade and immigration, such as ramping up immigrant visa processing, loosening travel restrictions, providing Cuban private-sector entrepreneurs with access to e-commerce platforms and cloud technology , and removing the $1,000 quarterly limit on family remittances.
The administration’s latest step to thaw U.S.-Cuba relations would allow more money to flow to the country’s private sector through remittances. It could also allow U.S. investors to participate in joint ventures in Cuba, which legalized small- and medium-size businesses last year in the wake of mass anti-government protests.
The announcement kicked Miami’s cross-border transactions attorneys into action. “I am always surprised by the resilience in the interest in Cuba,” said Akerman international practice chair Pedro Freyre. “No sooner had this announcement come out that I got three emails from clients who had been in the Cuba space, folks in the travel and hospitality sectors, asking when they can get back in there.”
The measures, which may involve the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), the Federal Aviation Administration (FAA), and the U.S. Department of Commerce’s Bureau of Industry and Security (BIS), have yet to appear in the Federal Register.
But while Holland & Knight international and cross-border transactions partner Aymee Valdivia has also been hearing from eager clients, including airlines and fintech firms, she said that investments involving major U.S. companies or significant sums of U.S. dollars would likely not gain authorization from the Cuban government. Without authorization, the agreements are not enforceable in Cuban courts.
“You cannot control what Cuba will authorize,” Valdivia said. “We have the experience of many clients trying to go to Cuba and put money in the country and invest there. It was authorized by the U.S. government but Cuba did not accept the business or approve the business. … They didn’t want that U.S. presence or to feel like they were losing control.”
The week before the announcement, the Biden administration directed OFAC to approve the country’s first equity investment in a Cuban private company since 1960. John Kavulich, president of the nonprofit U.S.-Cuba Trade and Economic Council, was approved to invest $25,000 in a “service -related” company owned by a Cuban national. At the time of Kavulich’s latest update, the Cuban government was reviewing the deal.
Valdivia said the Cuban government may be interested in authorizing such small investments, but substantial sums of money and large U.S. companies are unlikely to be approved. “I don’t see Cuba authorizing an Airbnb with six rooms, 50/50 owned by a Cuban person and a U.S. individual,” she said. “That would be U.S. interest and money put into property in Cuba. I don’t see that happening.”
Among the most interested clients are cruise lines, airlines, and other travel industry companies that were previously operating in Cuba until 2019, Valdivia added.
Freyre said U.S. investment attempts will start small, with Akerman already working on several potential matters involving small Cuban enterprises. “These small enterprises are in areas that are exciting,” he said. “These are the future Cuban unicorns. There are no unicorns in Cuba, but hopefully there will be little baby unicorns running around.”