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 Russia's Expat Community Shrinking

    Russia's troubled economy, tensions with West have led hundreds of thousands of foreigners to leave for better opportunities

    Accelerating the Push Against Islamic State: What Will Work?

    Experts stress need to step up military action, address root causes of Muslims' disaffection, counter IS social media messages in a massive way

    Experts: N. Korean Abductions Sought to Halt Brain Drain

    Pyongyang abducted about 3,800 South Koreans and more than a dozen Japanese nationals in late 1970s

    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.
    German Artists to Memorialize Refugees With Life Jacket Exhibiti
    X
    Hamada Elsaram
    February 05, 2016 4:30 PM
    Sold in every kind of shop in some Turkish port towns, life jackets have become a symbol of the refugee crisis that brought a million people to Europe in 2015.  On the shores of Lesbos, Greece, German artists collect discarded life jackets as they prepare an art installation they plan to display in Germany.  For VOA, Hamada Elrasam has this report from Lesbos, Greece.
    Video

    Video German Artists to Memorialize Refugees With Life Jacket Exhibit

    Sold in every kind of shop in some Turkish port towns, life jackets have become a symbol of the refugee crisis that brought a million people to Europe in 2015.  On the shores of Lesbos, Greece, German artists collect discarded life jackets as they prepare an art installation they plan to display in Germany.  For VOA, Hamada Elrasam has this report from Lesbos, Greece.
    Video

    Video E-readers Help Ease Africa's Book Shortage

    Millions of people in Africa can't read, and there's a chronic shortage of books. A non-profit organization called Worldreader is trying to help change all that one e-reader at a time. VOA’s Deborah Block tells us about a girls' school in Nairobi, Kenya where Worldreader is making a difference.
    Video

    Video Genius Lets World Share Its Knowledge

    Inspired by crowdsourcing companies like Wikipedia, Genius allows anyone to edit anything on the web, using its web annotation tool
    Video

    Video Former Drug CEO Martin Shkreli Angers US Lawmakers

    A former U.S. pharmaceutical business executive has angered lawmakers by refusing to explain why he raised the price of a life-saving pill by 5,000 percent. Martin Shkreli was removed from a congressional hearing on Thursday after citing his Fifth Amendment right to stay silent. Zlatica Hoke has more.
    Video

    Video Super Bowl TV Commercials are Super Business for Advertisers

    The Super Bowl, the championship clash between the two top teams in American Football, is the most-watched sporting event of the year, and advertisers are lining up and paying big bucks to get their commercials on the air. In fact, the TV commercials during the Super Bowl have become one of the most anticipated and popular features of the event. VOA's Brian Allen has a sneak peek of what you can expect to see when the big game goes to commercial break, and the real entertainment begins.
    Video

    Video In Philippines, Mixed Feelings About Greater US Military Presence

    In the Philippines, some who will be directly affected by a recent Supreme Court decision clearing the way for more United States troop visits are having mixed reactions.  The increased rotations come at a time when the Philippines is trying to build up its military in the face of growing maritime assertiveness from China.  From Bahile, Palawan on the coast of the South China Sea, Simone Orendain has this story.
    Video

    Video Microcephaly's Connection to Zika: Guilty Until Proven Innocent

    The Zika virus rarely causes problems for the people who get it, but it seems to be having a devastating impact on babies whose mothers are infected with Zika. VOA's Carol Pearson has more.
    Video

    Video Solar Innovation Provides Cheap, Clean Energy to Kenya Residents

    In Kenya, a company called M-Kopa Solar is providing clean energy to more than 300,000 homes across East Africa by allowing customers to "pay-as-you-go" via their cell phones. As Lenny Ruvaga reports from Kangemi, customers pay a small deposit for a solar unit and then pay less than a dollar a day to get clean energy to light up their homes or businesses.
    Video

    Video Stunning Artworks Attract Record Crowds, Thanks to Social Media

    A new exhibit at the oldest art museum in America is shattering attendance records. Thousands of visitors are lining up to see nine giant works of art that have gotten a much-deserved shot of viral marketing. The 150-year-old Smithsonian American Art Museum has never had a response quite like this. VOA's Julie Taboh reports.
    Video

    Video Apprenticeships Put Americans on Path Back to Work

    Trying to get more people into the U.S. workforce, the Obama administration last year announced $175 million in grants towards apprenticeship programs. VOA White House correspondent Aru Pande went inside one training center outside of Washington that has gained national recognition for helping put people on the path to employment.
    Video

    Video New Material May Reduce Concussion Effects

    As the 2016 National Football League season reaches its summit at the Super Bowl this coming Sunday (2/7), scientists are trying to learn how to more effectively protect football players from dangerous and damaging concussions. Researchers at Cardiff and Cambridge Universities say their origami-based material may solve the problem. VOA’s George Putic reports.
    Video

    Video Saudi Arabian Women's Sports Chip Away at Stereotypes

    Saudi Arabian female athletes say that sports are on the front line of busting traditions that quash women’s voices, both locally and internationally. In their hometown of Jeddah, a group of basketball players say that by connecting sports to health issues, they are encouraging women and girls to get out of their homes and participate in public life. VOA’s Heather Murdock reports.
    Video

    Video A Year Later, Fortunes Mixed for Syrians Forging New Lives in Berlin

    In April of last year, VOA followed the progress of six young Syrian refugees -- four brothers and their two friends -- as they made their way from Libya to Italy by boat, and eventually to Germany. Reporter Henry Ridgwell caught up with the refugees again in Berlin, as they struggle to forge new lives amid the turmoil of Europe's refugee crisis.
    Video

    Video Zika Virus May be Hard to Stop

    With the Zika virus spreading rapidly, the World Health Organization Monday declared Zika a global health emergency. As Alberto Pimienta reports, for many governments and experts, the worst is yet to come.

    More Americas News

    Zika Virus Dubbed Inconsequential Except for Link to Microcephaly

    Virus fairly harmless overall, health expert says, but possible link to thousands of babies born with underdeveloped brains causing alarm worldwide

    Obama Ramps Up Aid to Colombia as Peace Deal With Rebels Nears

    Leaders mark anniversary of joint initiative begun to help end armed conflict, drug trade; Obama calls Colombia a country 'on the brink of peace'

    Peru Board Weighs Another Presidential Election Disqualification

    Julio Guzman didn't fulfill requirements when registering his party, National Jury of Elections says; Cesar Acuna may also be barred because of plagiarism probe

    Colleagues' Defection Outrages Argentine Opposition Party

    Move by 12 Front for Victory members alters balance of power in Congress, exposes power struggle within country's broad Peronist movement

    Brazil Police Include Lula in Investigation of Auto Sector Bills

    Police are probing the possible use of bribes to influence legislation that benefits the auto industry

    Colombia's Santos Wants More US Aid as Peace Nears With Guerrillas

    President says his government hopes to sign peace accord with FARC by March 23, says Bogota also needs more US financial assistance to rebuild infrastructure