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12/03/13 - Oman Daily Observer - US sanctions make Cuba bank account too toxic for banks 

By David Adams 

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 last 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-US 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 US economic embargo against the communist island, as well as
sanctions resulting from it being included on the US 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 US
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 US 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
modernise these rules so they don't conflict with our policy goals. We want
more people-to-people travel, and more family travel," said US
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 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 US 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." M&T did not respond to calls for
comment, but US officials say over the past few years a number of banks
have ceased providing banking services to diplomatic missions partly due to
regulatory issues.


Original Source / Fuente Original: http://main.omanobserver.om/?p=35721


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