By Anthony Boadle Reuters
Published: July 25, 2007
HAVANA: Heightened scrutiny of banking transactions by the United States
since the Sept. 11, 2001, terror attacks has led European and Canadian
banks to curtail dealings with Cuba, according to bankers and businesses.
Cuba ceased exporting armed revolution to Latin America two decades ago,
but Washington still lists the Communist country, along with Iran,
Syria, Sudan and North Korea, as a "rogue" state that sponsors terrorism.
The U.S. Treasury denied that it was actively pressuring foreign banks
to cut off business with Cuba but said that it had stepped up pressure
on banks to cut ties with Iran in recent months.
Such efforts may be causing international banks to rethink their overall
policies toward customer-relationship risk.
"Financial institutions and companies have to make their own decisions
regarding what business they want to take on, and evaluating the risks
posed by certain customers is certainly a key factor," a Treasury
official said.
The USA Patriot Act allows the U.S. authorities to confiscate assets and
penalize institutions that fail to report money laundering and terrorist
financing. The result - perhaps intended - is that Western
businesspeople in Havana are having difficulty moving dollars to and
from Cuba because banks are increasingly refusing their business.
HSBC, Barclays, Credit Suisse, Royal Bank of Canada and the Bank of Nova
Scotia, also known as Scotiabank, have closed accounts of Cuban
companies or reduced business tied to Cuba since last year to comply
with U.S. regulations.
"Canadian banks have told clients to close their accounts and their
credit cards because they have a business address in Cuba," said Mario
Simonato, a Canadian importer of vehicles and heavy equipment into Cuba
from Canada.
ING Groep, the first big Western bank to set up business in Cuba, in
1994, said two weeks ago that it would close its Havana office. ING said
it was purely a business decision, but it followed the blacklisting last
year by the United States of ING's banking joint venture with Cuba.
Scotiabank last year ended dollar transactions by the Cuban Embassy in
Jamaica and was criticized for bowing to U.S. rules.
"It is a risk-mitigation measure, a straight issue of our ability to
settle transactions on U.S. dollar accounts," said a Scotiabank
spokesman, Frank Switzer. "It applies to anyone on a U.S. sanctions list."
The move to comply with U.S. regulations came after the heaviest penalty
in banking history. In 2004, the largest Swiss bank, UBS, was fined $100
million by the U.S. Federal Reserve for helping Cuba, Iran, Libya and
the former Yugoslavia swap old dollar bank notes for newer currency.
UBS said it had "substantially completed" its exit from dealings with
Cuba, Iran, North Korea, Myanmar, Sudan and Syria by the end of last year.
"UBS took this decision in 2005 after its own, careful evaluation of the
costs and benefits of doing business with counterparties in these
countries," said Doug Morris, a UBS spokesman in New York.
Shunned by Swiss banks, Cuba has had trouble funding its United Nations
mission in Geneva, a European diplomat in Havana said.
In June, Cuba complained that UBS and Banistmo, based in Panama and
owned by HSBC, had refused to process the payment of its annual
membership fee in the Latin American Parliament.
The bank squeeze is obstructing Cuba's financial operations more than
the U.S. trade embargo enforced since 1962, which has been since
tightened but then amended in 2000 to allow U.S. companies to sell food
to Cuba.
"The Patriot Act gave U.S. authorities a tool to do what they could not
do before: chase foreign banks to comply with U.S. sanctions," said a
European businessman in Havana who asked not to be identified.
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