News / Americas

US Sanctions Make Cuba's Bank Account Too Toxic

FILE - Cuban pesos are seen at at vegetable stall at a market in Sagua La Grande, Villaclara province in central Cuba.
FILE - Cuban pesos are seen at at vegetable stall at a market in Sagua La Grande, Villaclara province in central Cuba.
Reuters
The decision by a New York bank to close Cuba's checking account in the United States has presented an unusual diplomatic quandary that provides a test for new-found pragmatism in  relations between the two longtime foes.
 
Cuba announced on Tuesday that it is ceasing almost all consular services in the United States after M&T Bank  closed its account, sending shock waves through the booming Cuba-U.S. travel industry and threatening to undermine the Obama administration's goal of closer “people-to-people” ties.
 
Cuba blamed its unusual bank-less status on the longstanding U.S. economic embargo against the communist island, as well as sanctions resulting from it being included on the U.S. list of state sponsors of terrorism. These incur regulations - and potential fines - so onerous that banks are reluctant to accept such toxic accounts, experts say.
 
Cuba has so far not threatened any reciprocal action against the U.S. diplomatic mission in Havana, and observers were watching for signs of restraint, which diplomats would take as further indication that Cuba is pursuing improved relations.
 
The banking snafu was a problem not likely to go unresolved for too long because both Cuba and the United States have too much to lose from disrupting travel between the two countries, experts said.
 
But it exposed a conflict within U.S. policy towards Cuba which on the one hand wants closer travel ties with the island, and yet on the other brands it a supporter of terrorism.
 
“It begs the question how do we modernize these rules so they don't conflict with our policy goals. We want more people-to-people travel, and more family travel,” said U.S. Representative Joe Garcia, a Cuban-American Democrat from Miami.
 
He was referring to the Obama administration's support for educational and cultural exchanges, as well as unrestricted visits for Cuban families divided by the Florida Straits.
 
“We have a series of rules that are at best arcane and were cumbersome when they were created three decades ago. They are out of tone and time.”
 
Cuba needs tourism revenue
 
Cuba also cannot afford a drop in tourism to the island, which has become a mainstay of its cash-strapped economy.
 
The Obama administration says it is “actively working” to help Cuba find a bank willing to handle its U.S. accounts, but officials declined to go into details.
 
“We would like to see the Cuban missions return to full operations,” a State Department spokeswoman said.
 
The fastest way to do that would be by taking Cuba off the list of state sponsors of terrorism, a pariah status many Cuba analysts say the island no longer deserves.
 
The Obama administration may be contemplating such a move, but does not appear ready to go that far yet, analysts say.
 
“This banking issues is all about Cuba being on the list of state sponsors of terrorism,” said Richard Feinberg, a senior fellow of the Washington-based Brookings Institution.
 
A heightened sanctions compliance regime in recent years was more directed at Iran, North Korea and Syria, he noted, but Cuba suffered the consequences by being stuck in the same boat.
 
“The huge irony is that all this is happening just as we are about to relax sanctions on Iran,” he added.
 
Even so, the Obama administration ought to be able to come up with a way to reassure the banks that their exposure to regulation by the Treasury Department's Office of Foreign Assets Control (OFAC), which enforces sanctions, will be minimal, legal experts say.
 
“The Treasury Department needs to tell a Washington DC area bank that it has their blessing to handle Cuba's account through expediting the licensing,” said Antonio C. Martinez II, a New York attorney who deals with Cuba sanctions compliance and edits a blog critical of the embargo.
 
A Miami lawyer familiar with international banking and the Cuba embargo suggested that the White House or the State Department could simply resolve the matter with the Office of the Controller of the Currency, which regulates all national banks.
 
“Banks are very nervous about any type of misstep about money flowing to any country on the OFAC list because the fines, even if you only make a small mistake, are huge,” he said. “You have to scrutinize everything coming in and out. The problem is who wants to take that on? You just can't make money on these accounts.”
 
Regulatory hurdles make banks leery
 
M&T did not respond to calls for comment, but U.S. officials say over the past few years a number of banks have ceased providing banking services to diplomatic missions partly due to regulatory issues.
 
Some banks have paid hefty fines for bad Cuba transactions. In June Italy's second-largest bank, Turin-based Intesa San Paolo, paid OFAC $3 million over U.S. dollar transactions involving Cuba, Iran and Sudan.
 
Intesa processed 53 wire transfers for more than $1.6 million to Cuba between 2004-2008, according to OFAC.
 
Last year, the Dutch bank ING Bank NV agreed to pay $619 million to settle U.S. government allegations that it moved money illegally through banks in the United States in violation of sanctions against Cuba, Iran and other countries. It was the biggest fine against a bank for sanctions violations, officials said.
 
Swiss banks UBS AG and Credit Suisse AG  and Britain's Lloyds TSB Bank PLC and Barclays Bank PLC have also paid out hundreds of millions more in similar fines involving Cuba transactions.
 
U.S. officials say over the past few years a number of banks have ceased providing banking services to diplomatic missions linked to terrorism due to regulatory issues.
 
“Many banks and companies get caught in the sanctions web and they often can pay a costly price,” said Martinez.
 
“The question is does Cuba belong on the terror list.”

You May Like

Video Positive Messaging Helps Revamp Ethiopia's Image

In country once connected with war, poverty, famine, headlines now focus on fast-growing economy, diplomatic reputation More

Russian Activist Thinks Kremlin Ordered Nemtsov's Death

Alexei Navalny says comments of Russian liberals who think government wasn't involved are 'nonsense.' More

Video Land Disputes Rise Amid Uganda Oil Boom

Investors appear to be cashing in by selling parcels of land to multiple buyers More

This forum has been closed.
Comment Sorting
Comments
     
by: John Schluter
November 29, 2013 3:24 PM
This is too Funny!
I have the same problem;
Tons of income
800 credit score
But the bank can't loan to me even though they have a record amount of funds available. They told me the US government is making it impossible for them to loan.

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Positive Messaging Transforms Ethiopia's Imagei
X
Marthe van der Wolf
March 03, 2015 9:03 PM
Ethiopia was once known for famine and droughts. Now, headlines more often point to its fast-growing economy and its emergence as a regional peacemaker. How has Addis Ababa changed the narrative? VOA's Marthe van der Wolf reports.
Video

Video Positive Messaging Transforms Ethiopia's Image

Ethiopia was once known for famine and droughts. Now, headlines more often point to its fast-growing economy and its emergence as a regional peacemaker. How has Addis Ababa changed the narrative? VOA's Marthe van der Wolf reports.
Video

Video Cyber War Rages Between Iran, US

A newly published report indicates Iran and the United States have increased their cyber attacks on each other, even as their top diplomats are working toward an agreement to guarantee Iran does not develop a nuclear weapon and to free Iran from international sanctions. The development is part of a growing global trend. VOA’s Al Pessin reports from London.
Video

Video Answers Elude Families of MH370 Passengers

For the families on board Malaysia Airlines flight MH370, an airline official’s statement nearly one year ago that the plane had lost contact with air traffic control at 2:40 AM is the only thing that remains confirmed. William Ide reports.
Video

Video Land Disputes Arise Amid Uganda Oil Boom

Ugandan police say there has been a sharp increase in land disputes, with 10 new cases being reported each day. The claims come amid an oil boom as investors appear to be cashing in by selling parcels of land to multiple buyers. Meanwhile, the people who have been living on the land for decades are chased away, sometimes with a heavy hand. VOA's Serginho Roosblad reports.
Video

Video In Russia, Many Doubt Opposition Leader's Killer Will Be Found

The funeral has been held in Moscow for Boris Nemtsov, the opposition leader who was assassinated late Friday just meters from the Kremlin. Nemtsov joins a growing list of outspoken critics of Russia under the leadership of President Vladimir Putin who are believed to have been murdered for their work. VOA’s Daniel Schearf reports from Moscow.
Video

Video Simulated Astronauts Get Taste of Mars, in Hawaii

For generations, people have dreamed of traveling to Mars to explore Earth's closest planetary neighbor. VOA's Mike O'Sullivan reports that while space agencies like NASA are planning manned missions to the planet, some volunteers in Hawaii are learning how humans will cope with months in isolation on a Mars base.
Video

Video Destruction of Iraq Artifacts Shocks Archaeologists

The city of Mosul was once one of the most culturally rich and religiously diverse cities in Iraq. That tradition is under attack by members of the Islamic State who have made Mosul their capital city. The Mosul Museum is the latest target of the group’s campaign of terror and destruction, and is of grave concern to archaeologists around the world. VOA’s Kane Farabaugh reports.
Video

Video Smartphones May Help in Diagnosing HIV

Diagnosing infections such as HIV requires expensive clinical tests, making the procedure too costly for many poor patients or those living in remote areas. But a new technology called lab-on-a-chip may make the tests more accessible to many. VOA’s George Putic reports.
Video

Video Afghan Refugees Complain of Harassment in Pakistan

Afghan officials have expressed concern over reports of a crackdown on Afghan refugees in Pakistan following the Peshawar school attack in December. Reports of mass arrests and police harassment coupled with fear of an uncertain future are making life difficult for a population that fled its homeland to escape war. VOA’s Ayesha Tanzeem reports from Islamabad.
Video

Video Ukrainian Volunteers Prepare to Defend Mariupol

Despite the ongoing ceasefire in Ukraine, soldiers in the city of Mariupol fear that pro-Russian separatists may be getting ready to attack. The separatists must take or encircle the city if they wish to gain land access to Crimea, which was annexed by Russia early last year. But Ukrainian forces, many of them volunteers, say they are determined to defend it. Patrick Wells reports from Mariupol.
Video

Video Moscow Restaurants Suffer in Bad Economy, Look for Opportunity

As low oil prices and Western sanctions force Russia's economy into recession, thousands of Moscow restaurants are expected to close their doors. Restaurant owners face rents tied to foreign currency, while rising food prices mean Russians are spending less when they dine out. One entrepreneur in Moscow has started a dinner kit delivery service for those who want to cook at home to save money but not skimp on quality. VOA's Daniel Schearf reports.
Video

Video Presidential Hopefuls Battle for Conservative Hearts and Minds

One after another, presumptive Republican presidential contenders auditioned for conservative support this week at the Conservative Political Action Conference held outside Washington. The rhetoric was tough as a large field of potential candidates tried to woo conservative support with red-meat attacks on President Barack Obama and Democrats in Congress. VOA Political Columnist Jim Malone takes a look.
Video

Video Southern US Cities Preserve Civil Rights Heritage to Boost Tourism

There has been a surge of interest in the American civil rights movement of the 1950s and '60s, thanks in part to the Hollywood motion picture "Selma." Five decades later, communities in the South are embracing the dark chapters of their past with hopes of luring tourism dollars. VOA's Chris Simkins reports.
Video

Video Deep Under Antarctic Ice Sheet, Life!

With the end of summer in the Southern hemisphere, the Antarctic research season is over. Scientists from Northern Illinois University are back in their laboratory after a 3-month expedition on the Ross Ice Shelf, the world’s largest floating ice sheet. As VOA’s Rosanne Skirble reports, they hope to find clues to explain the dynamics of the rapidly melting ice and its impact on sea level rise.

All About America

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More

More Americas News

Colombia Detains China Cosco Shipping Vessel Over Illegal Arms

The detained vessel, operated by Cosco Shipping Co Ltd, was headed for Cuba when it was stopped; the illegal cargo was detected during an inspection
More

Weapons Found on Chinese-Flagged, Cuba-Bound Ship

Authorities in Cartegena, Colombia, detained ship Saturday; captain faces trafficking charges
More

US Weighs Venezuela’s Order to Cut US Embassy Staff

US State Department dismisses Caracas’ charge of undermining government as ‘baseless’
More

Venezuela Lets Uruguay Pay for Oil With Goods, Services

Struggling economy, currency controls in Venezuela have led to shortages of medicine, toilet paper, flour, shampoo, other basic goods
More

US Proposes Making Radio Marti, Broadcaster to Cuba, Independent

Officials say proposal was unrelated to Cuba outreach and aimed at modernizing the broadcaster
More

Venezuela to Require Visas for US Travelers

Move eliminates United States from list of 65 countries exempt from tourist visa requirements
More