Foreign Banks Running Scared of Transactions with Cuba

Although the financial institutions are not present on the Island, in the banking system there is always a mandatory step through the United States, via the use of the dollar, the reference currency.

From Cubaencuentro

HAVANA TIMES – The bank with which the Swiss NGO MediCuba operates in Havana will no longer make transfers to the island, because it fears sanctions from the Trump administration, a fear that is replicated in the international financial system when working with Cuba, reports the AFP.

“We don’t know what to do,” complains Luisa Sánchez, coordinator of MediCuba. Since 1992, they support the Island in projects of HIV treatment, cancer control, pediatrics and care for the elderly.

“On August 27, our advisor (bank) called our accountant to inform him that on September 1 there would be no more transfers to Cuba,” she explains. The bank, PostFinance, was one of Switzerland’s last to accept those transactions.

Contacted by the AFP, this Swiss Post subsidiary confirmed the breaking of any link with Cuba “due to the sanctions of the United States.”

“PostFinance is not subject to US law, but it participates in global payment transactions and therefore depends on a network of correspondent banks and access to dollar operations,” they explained.

The case of MediCuba is not unique. The testimonies of repatriated Cubans and companies that work on or with the Island multiply: the closing of bank accounts, withdrawal of payment methods and restrictions on transfers.

Some urgently seek another bank, often private institutions that charge high commissions. Others lie about their residence to open an account elsewhere and some try to transfer funds by any means, such as Western Union or in the pocket of a friendly traveler.

“The banks entered a phase of ‘overcompliance’ (excessive application of the rules) and this affects everyone,” says a European tourism entrepreneur, installed decades ago in Cuba, whose bank gave him a period of 60 days before to closing their account.

Under anonymity, this man said that a transfer from a client, which included in its title the word “Cuba”, set off the alarms of his bank. A lawyer explained that no banking institution can be forced to retain a client. They suffered the same mishap.

This nervousness of the banks is not new: since 1962 the United States has applied an embargo against Cuba that prohibits it from making transactions in dollars.

And the fines for violating US embargoes (not only against Cuba but also against Iran, Libya, Sudan …) are high: US $1.3 billion for the Italian UniCredit and $947 million for the British Standard Chartered, both imposed in April; $1.340 billion for the Société Générale in 2018 and $8.9 billion (record figure) for BNP Paribas in 2014.

With the arrival of Donald Trump to the White House, Washington intensified its sanctions against the Island, accusing it of supporting Nicolas Maduro’s Venezuela militarily.

Since May of this year, titles 3 and 4 of the Helms-Burton Act threaten to prosecute and prohibit travel to the United States to anyone who does business with assets confiscated by the 1959 revolution.

The vague definition of the crime allows a broad interpretation: the Société Générale is being sued in Miami by the heirs of a pre-revolution Cuban bank integrated to the current National Bank of Cuba, with which the French financial institution conducted banking operations.

“Ninety-nine percent of banks have US interests,” said Dominique Hector, a French lawyer who advises foreign companies in Cuba and Panama.

He warns that, even if they are not present on the Island, “in the banking system, there is always a step forced by the United States” through the use of the dollar, the reference currency.

“I have several clients whose accounts have been closed,” while others “could never receive their payments because their French bank refused to process them,” adds Hector.

According to Cuban Foreign Minister Bruno Rodríguez, since Trump arrived “dozens of foreign banks have limited or interrupted their financial ties” with Cuba, including the Panamanian Multibank, which closed its branch in Havana and the accounts of companies that work with the Island from Panama.

Cuba depends on foreign investment to boost its growth making this banking panic particularly bad news. The government estimates that the difficulties faced with 140 banks during the last year cost the country US $725.8 million.