To date there are a total of ten foreign banks with representative offices operating in Cuba but the list is expanding. These are not branch offices of the banks themselves. Foreign banks in Cuba manage the banking between their offices and offices of the Cuban banking system. These offices specialize in commercial banking.
The American embargo/blockade continues to make it extremely difficult for Cuba to obtain credit, transfer money, transact in US dollars, have correspondent banking relationships and engage in free trade. It also adversely effects foreign business persons who are not American citizens but carry out business with Cuba by freezing their funds and charging huge fines against them.
International banks fear operating in Cuba because of the huge fines imposed by the United States Cuba Assets Control Regulations (CACR). In the past, banks such as BNP Paribas, Barclays, Commerzbank and Credit Agricole are just a few of the banks which have paid huge fines levied by CACR.
Bruno Rodríguez, Cuba’s Minister of the Foreign Affairs Department, outlined the outstanding problems of the embargo/blockade in a report dated March 15 of this year:
“Cuba’s authorization to use US dollars in its international transactions, a measure which has been included in this new package, concerns an important aspect of the blockade. For this measure to be viable, the US Government is required to issue a political statement as well as clear and precise instructions that would provide legal and political guarantees to banks, in order to halt financial persecution and reverse the intimidating effects generated by the sanctions imposed for years on US and third-countries financial institutions for conducting legitimate transactions with Cuba.
In the coming days we will attempt to make some transfers in US dollars to confirm that these can be done and that the banks have received instructions indicating that they are allowed to engage in financial operations with Cuba without fear of sanctions. Besides, we hope that, from now on, such fines as those given to important banks, namely Commerzbank and Credit Agricole, just to mention the most recent examples, will not be applied again; and that foreign financial institutions would not refuse to make transactions with our country.
Authorizing Cuba to use US dollars does not mean that banking relations between Cuba and the United States have normalized. Cuban banks are still not allowed to open correspondent accounts in US banks, and therefore our operations will necessarily continue to be done through third parties, which increases operational costs as well as the amount of related procedures.”
List of foreign banks in Cuba:
- Banco Bilbao Vizcaya Argentaria, (BBVA), Spain: BBVA has been catering to diverse sectors of Cuban economy but focuses mainly on industrial projects and trade operation financing.
- FRBanco Sabadell, Spain
- Bankia, Spain
- BPCE International et Outre-Mer, France
- Fransabank, Lebanon
- Havin Bank Ltd., United Kingdom
- Multibank, Panama
- National Bank of Canada: the National Bank of Canada has been in Cuba since 1928. Since 1995, the National Bank has had a representative office in Cuba. The National Bank of Canada focuses on commercial banking activities.
- Republic Bank Trinidad and Tobago: This bank has had a representative office in Cuba since 2002.
- Scotiabank of Canada: Scotiabank originally had 24 branches in Cuba between 1899 to 1960. However since 1960 there has not been a branch. Scotia at the present time has a representative office in Havana.
Canada, a country with a long term relationship with Cuba, has strong banking representation on the Island with the presence of three of the big banks of Canada: National Bank, Scotiabank and Royal Bank.
In September, the National Bank of Qatar, (QNB), the largest lender in the Gulf, announced it would open a representative office in Cuba.
Other Latin American banks could potentially open offices in the near future in Cuba.
The future of banks and banking services depend on the outcome of the November elections for the U.S. presidency and the policy stance taken by the new president towards Cuba. If the US decides to increase its foothold in Cuba and lift the antiquated embargo, there will be business opportunities for Americans going forward and banking services will surely strengthen with the Cuban economy.
Unless licensed by OFAC: 31 C.F.R. §515.201 (a) (1) and §515.201 (b) (1) two regulations prevent the establishment of correspondent banking accounts with the Republic of Cuba government-operated financial institutions.
Title 31 → Subtitle B → Chapter V → Part 515 → Subpart B Title 31: Money and Finance: Treasury PART 515—CUBAN ASSETS CONTROL REGULATIONS Subpart B—Prohibitions
§515.201 Transactions involving designated foreign countries or their nationals; effective date.
(a) All of the following transactions are prohibited, except as specifically authorized by the Secretary of the Treasury (or any person, agency, or instrumentality designated by him) by means of regulations, rulings, instructions, licenses, or otherwise, if either such transactions are by, or on behalf of, or pursuant to the direction of a foreign country designated under this part, or any national thereof, or such transactions involve property in which a foreign country designated under this part, or any national thereof, has at any time on or since the effective date of this section had any interest of any nature whatsoever, direct or indirect:
(1) All transfers of credit and all payments between, by, through, or to any banking institution or banking institutions wheresoever located, with respect to any property subject to the jurisdiction of the United States or by any person (including a banking institution) subject to the jurisdiction of the United States;
(2) All transactions in foreign exchange by any person within the United States; and
(3) The exportation or withdrawal from the United States of gold or silver coin or bullion, currency or securities, or the earmarking of any such property, by any person within the United States.
(b) All of the following transactions are prohibited, except as specifically authorized by the Secretary of the Treasury (or any person, agency, or instrumentality designated by him) by means of regulations, rulings, instructions, licenses, or otherwise, if such transactions involve property in which any foreign country designated under this part, or any national thereof, has at any time on or since the effective date of this section had any interest of any nature whatsoever, direct or indirect:
(1) All dealings in, including, without limitation, transfers, withdrawals, or exportations of, any property or evidences of indebtedness or evidences of ownership of property by any person subject to the jurisdiction of the United States; and
(2) All transfers outside the United States with regard to any property or property interest subject to the jurisdiction of the United States.
[28 FR 6974, July 9, 1963, as amended at 62 FR 45106, Aug. 25, 1997]