Firms in Cuba Running Afoul of US Banking Squeeze


The bank used by a Swiss NGO operating in Cuba has refused to handle any more transfers to Havana over fears of US sanctions, a concern replicated across the international financial system when dealing with the communist-run island.

"We don't know what to do," said Luisa Sanchez, coordinator of MediCuba, an NGO operating in Cuba since 1992 providing HIV, cancer and pediatric assistance.

"On August 27, our bank called our accountant to inform him that from September 1, there would be no more transfers to Cuba," Sanchez told AFP in Havana. 

The bank, PostFinance, was one of the last Swiss banks to accept such transactions.

Contacted by AFP, the Swiss Post subsidiary confirmed it was cutting banking links to Cuba "due to the United States sanctions."

"PostFinance isn't 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," it said.

MediCuba is not alone. 

Some companies left to find other means of paying employees and rent say they are looking urgently for another bank -- often private institutions that charge high commissions. 

Some are using Western Union money transfers while the more desperate have taken to asking travelers to bring cash into the country for them.

- Excessive caution -

"The banks are going into a phase of overcompliance and this affects everyone," claimed a European tourism entrepreneur, who said his bank gave him a 60-day notice to close his account.

The businessman said any transfer from a foreign client, which includes the word "Cuba" in the title, is enough to set off alarm bells at international banks.

For Cuba, which depends on foreign investment to boost growth, the banking crux is bad news. The government estimates that restrictions it faced with 140 banks during the past year has cost the country nearly three quarters of a billion dollars.

Nervousness on the banks' part is nothing new in Havana. The United States has been enforcing a trade embargo on Cuba since 1962 that prohibits the communist-run island from making dollar transactions.

The US has long set a precedent of aggressively going after banks that seek to defy sanctions. Italy's UniCredit paid a $1.3 billion fine in April for moving millions of dollars through the US banking system on behalf of Cuba, Iran and Libya.

In 2014, French bank BNP Paribas agreed to pay a record $8.9 billion penalty for conspiring to violate sanctions that prohibit transactions with Sudan and other countries.

Since the arrival of Donald Trump in the White House, Washington has toughened sanctions against Cuba, accusing it of aiding and abetting President Nicolas Maduro's government in Venezuela.

French bank Societe Generale is facing a suit in Miami under the recently revived Helms Burton law for profiting from property seized by Havana in the wake of the 1959 revolution.

The plaintiffs are the heirs to a Cuban bank that is now part of the National Bank of Cuba, with which the French bank conducted business.

- Essential dollar -

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

Companies are vulnerable even if they don't officially have a presence on the island, she says.

"In the banking system, there is always a step controlled by the United States," through the use of the dollar, the currency of reference.

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

Panama's Multibank also shut down numerous foreign accounts related to Cuba this year.

At the UN General Assembly last week, Cuba's Foreign Minister Bruno Rodriguez slammed the US over increased hostility against Havana, particularly for imposing additional obstacles to foreign trade and banking and financial restrictions.

But there seems little that Cuba or the banks can do to counter the problem.

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