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

Turkey: No Ransom Paid for Release of Hostages Held by IS Militants

President Erdogan hails release of hostages as diplomatic success but declines to be drawn on whether their release freed Ankara's hand to take more active stance against insurgents More

Audio Sierra Leone Ebola Lockdown May Be Extended

Lockdown, which started Friday, aims to allow health workers to locate hidden Ebola patients, educate others on how to avoid the deadly disease More

US Pivot to Asia Demands Delicate Balancing Act

As the tumult in the Middle East distracts Obama, shifting American focus eastward appears threatened 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.
Natural Gas Export Plan Divides Maryland Towni
X
Deborah Block
September 21, 2014 2:12 PM
A U.S. power company that has been importing natural gas now wants to export it. If approved, its plant in Lusby, Maryland, would likely be the first terminal on the United States East Coast to export liquefied natural gas from American pipelines. While some residents welcome the move because it will create jobs, others oppose it, saying the expansion could be a safety and environmental hazard. VOA’s Deborah Block examines the controversy.
Video

Video Natural Gas Export Plan Divides Maryland Town

A U.S. power company that has been importing natural gas now wants to export it. If approved, its plant in Lusby, Maryland, would likely be the first terminal on the United States East Coast to export liquefied natural gas from American pipelines. While some residents welcome the move because it will create jobs, others oppose it, saying the expansion could be a safety and environmental hazard. VOA’s Deborah Block examines the controversy.
Video

Video Fears Ebola Outbreak ‘Beyond Our Capability to Contain’

Each day brings with it new warnings about the deadly Ebola outbreak already blamed for killing more than 2,600 people across West Africa. And while countries and international organizations like the United Nations are starting to come through on promises of help for those most affected, the unprecedented speed with which the virus has spread is raising questions about the international response. VOA's Jeff Seldin has more from Washington.
Video

Video Difficult Tactical Battle Ahead Against IS Militants in Syria

The U.S. president has ordered the military to intensify its fight against the Islamic State, including in Syria. But how does the military conduct air strikes in a country that is not a U.S. ally? VOA correspondent Carla Babb reports from the Pentagon.
Video

Video Iran, World Powers Seek Progress in Nuclear Talks

Iran and the five permanent members of the U.N. Security Council plus Germany, known as the P5 + 1, have started a new round of talks on Iran's nuclear program. VOA State Department correspondent Pam Dockins reports that as the negotiations take place in New York, a U.S. envoy is questioning Iran's commitment to peaceful nuclear activity.
Video

Video Alibaba Shares Soar in First Day of Trading

China's biggest online retailer hit the market Friday -- with its share price soaring on the New York Stock Exchange. The shares were priced at $68, but trading stalled at the opening, as sellers held onto their shares, waiting for buyers to bid up the price. More on the world's biggest initial public offering from VOA’s Bernard Shusman in New York.
Video

Video Obama Goes to UN With Islamic State, Ebola on Agenda

President Obama goes to the United Nations General Assembly to rally nations to support a coalition against Islamic State militants in Iraq and Syria. He also will look for nations to back his plan to fight the Ebola virus in West Africa. As VOA White House correspondent Luis Ramirez reports, Obama’s efforts reflect new moves by the U.S. administration to take a leading role in addressing world crises.
Video

Video Migrants Caught in No-Man's Land Called Calais

The deaths of hundreds of migrants in the Mediterranean this week has only recast the spotlight on the perils of reaching Europe. And for those forunate enough to reach a place like Calais, France, only find that their problems aren't over. Lisa Bryant has the story.
Video

Video Westgate Siege Anniversary Brings Back Painful Memories

One year after it happened, the survivors of the terror attack on Nairobi's Westgate Shopping Mall still cannot shake the images of that tragic incident. For VOA, Mohammed Yusuf tells the story of victims still waiting for the answer to the question 'how could this happen?'
Video

Video Militant Assault in Syria Displaces Thousands of Kurds

A major assault by Islamic State militants on Kurds in Syria has sent a wave of new refugees to the Turkish border, where they were stopped by Turkish border security. Turkey is already hosting about 700,000 Syrian refugees who fled the civil war between the government and the opposition. But the government in Ankara has a history of strained relations with Turkey's Kurdish minority. Zlatica Hoke reports Turkey is asking for international help.
Video

Video Whaling Summit Votes to Uphold Ban on Japan Whale Hunt

The International Whaling Commission, meeting in Slovenia, has voted to uphold a court ruling banning Japan from hunting whales in the Antarctic Ocean. Conservationists hailed the ruling as a victory, but Tokyo says it will submit revised plans for a whale hunt in 2015. Henry Ridgwell reports from London.
Video

Video A Dinosaur Fit for Land and Water

Residents and tourists in Washington D.C. can now examine a life-size replica of an unusual dinosaur that lived almost a hundred million years ago in northern Africa. Scientists say studying the behemoth named Spinosaurus helps them better understand how some prehistoric animals adapted to life on land and in water. The Spinosaurus replica is on display at the National Geographic museum. VOA’s George Putic has more.
Video

Video Iraqi Kurdistan Church Helps Christian Children Cope find shelter in churches in the Kurdish capital, Irbil

In the past six weeks, tens of thousands of Iraqi Christians have been forced to flee their homes by Islamic State militants and find shelter in churches in the Kurdish capital, Irbil. Despite U.S. airstrikes in the region, the prospect of people returning home is still very low and concerns are starting to grow over the impact this is having on the displaced youth. Sebastian Meyer reports from Irbil on how one church is coping.


Carnage and mayhem are part of daily life in northern Nigeria, the result of a terror campaign by the Islamist group Boko Haram. Fears are growing that Nigeria’s government may not know how to counter it, and may be making things worse. More

AppleAndroid

More Americas News

Former El Salvador President to Await Graft Trial in Jail, Not at Home

Francisco Flores, who had been on the run until early Sept. before turning himself in, accused of misappropriating $15M in 2001 earthquake relief donations
More

US Won't Impede Venezuela's UN Security Council Bid

Washington is clearly unhappy, however, with idea of country joining the Council, which has the task of overseeing international peace and security
More

Video Dehydration Is Top Killer of Southern Arizona's Migrants

US Border Patrol's search and rescue unit launches 'blue blinking light of life program' - a series of poles strategically placed throughout desert that emit high-intensity blue light
More

US Steps Up Pressure on Guatemala Over Labor Rights

Trade representative says Obama administration will push ahead with legal action under free trade agreement to make country meet international standards
More

Video US Attempts Crackdown on Trafficking Along Southern Border

Nogales, Arizona, notoriously known as 'tunnel city,' used by traffickers to smuggle humans, narcotics into US and Border Patrol responds with new technologies
More

Video Arizona Non-Profit Helps Keep Dehydrated Migrants Alive

The Sonoran Desert, a common crossing point for illegal immigrants, is one of North America's hottest places
More