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

Uganda Court Annuls Anti-Gay Law

Court says law was passed in parliament without enough members present for a full quorum More

Multimedia Thailand Makes Efforts to Improve Conditions for Migrant Laborers

In Thailand, its not uncommon for parents to bring their children to work; one company, in-collaboration with other organizations, address safety concerns More

In Indonesia, Jihad Video Raises Concern

Video calls on Indonesians to join Islamic State of Iraq and the Levant, ISIL 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.
In Thailand, Some Efforts to Improve Conditions For Migrant Laborersi
X
Steve Herman
August 01, 2014 6:22 PM
Thailand has been facing increasing international scrutiny as a hub of human trafficking and slave labor. Some of the kingdom’s companies are striving to improve working conditions, especially for the millions of migrant laborers from surrounding countries. VOA Correspondent Steve Herman in Bangkok takes a look at one initiative for children at construction sites
Video

Video In Thailand, Some Efforts to Improve Conditions For Migrant Laborers

Thailand has been facing increasing international scrutiny as a hub of human trafficking and slave labor. Some of the kingdom’s companies are striving to improve working conditions, especially for the millions of migrant laborers from surrounding countries. VOA Correspondent Steve Herman in Bangkok takes a look at one initiative for children at construction sites
Video

Video Public Raises its Voice on Power Plant Pollution

In the United States, proposed rules to cut pollution from the nation’s 600 coal-fired power plants are generating a heated debate. The U.S. Environmental Protection Agency, charged with writing and implementing the plan, has already received 300,000 written comments. As VOA’s Rosanne Skirble reports, another 1,600 people are lining up this week at EPA headquarters and at satellite offices around the country to give their testimony in person.
Video

Video Information War Rages Alongside Real One in Ukraine

The downing of the Malaysian airliner two weeks ago, and allegations that Russians are shelling Ukrainian troops across the border, have moved the information war swirling around the Ukrainian conflict to a new level. VOA's Al Pessin reports from Kyiv.
Video

Video When Fighting Eases, Gazans Line Up at Bakeries

When there is a lull in the conflict in Gaza, residents who have been hunkered down in their apartments rush out to stock up on food and other necessities. Probably the most important destination is the local bakery. VOA’s Scott Bobb reports from Gaza City.
Video

Video China Investigates Powerful Former Security Chief

The public in China is welcoming the Communist Party's decision to investigate one of the country's once most powerful politicians, former domestic security chief Zhou Yongkang. Analysts say the move by President Xi Jinping is not only an effort to win more support for the party, but an essential step to furthering much needed economic reforms and removing those who would stand in the way of change. VOA's Bill Ide has more from Beijing.
Video

Video US-Funded Program Offers Honduran Children Alternative to Illegal Immigration

President Obama and Central American leaders recently agreed to come up with a plan to address poverty and crime in the region that is fueling the surge of young migrants trying to illegally enter the United States. VOA’s Brian Padden looks at one such program in Honduras - funded in part by the United States - which gives street kids not only food and safety but a chance for a better life without, crossing the border.
Video

Video 'Fab Lab' Igniting Revolution in Kenya

The University of Nairobi’s Science and Technology Park is banking on 3-D prototyping to spark a manufacturing revolution in the country. Lenny Ruvaga has more for from Nairobi's so-called “FabLab” for VOA.
Video

Video Immigrant Influx on Texas Border Heats Up Political Debate

Immigrants from Central America continue to cross the U.S.-Mexico border in south Texas, seeking asylum in the United States, as officials grapple with ways to deal with the problem and provide shelter for thousands of minors among the illegal border crossers. As VOA's Greg Flakus reports from Houston, the issue is complicated by internal U.S. politics and U.S. relations with the troubled nations that immigrants are fleeing.

AppleAndroid

More Americas News

Judge Criticizes Argentina for 'Half-truths' at Hearing

US District Judge Thomas Griesa orders nation to stop making misleading public statements, 'half truths' concerning status of their debts
More

House to Vote on Revised Border Security Bill

Some GOP representatives optimistic party has votes needed to pass bill
More

Video US-Funded Program Offers Honduran Children Alternative to Illegal Immigration

Program gives street kids not only food and safety, but a chance for a better life without crossing US border
More

US Senate Kills Immigration Bill, House to Vote Friday

Earlier Thursday, Republican-led chamber abandoned plans to vote on $659 million bill that addresses influx of more than 57,000 unaccompanied Central American children
More

Argentina Defaults Again on Debt

Negotiators failed late Wednesday to reach an agreement with New York investment companies to avert the default
More

Cameroon’s Coffee Farmers Blame Government for Production Drops

Cameroon's growers, dealers and experts mourn declines in a nation that once ranked 12th in the world.
More