Cuba

Commentary

At CompleXCountries, it is our mission to provide a forum where treasurers can openly discuss issues and share experiences. We then publish the essence of the discussion, but in a format which respects the need for confidentiality – though it is valuable general information, there is no upside to telling the whole world your specific company has had a problem with Bank A, or that you find country B’s exchange control regulations difficult to handle.

Sanctions pose an additional problem – and, of course, they are very topical at the moment. The problem is simple: while everybody is anxious to comply with all the rules and regulations, there are always situations which require some element of judgment, or where the rules are not totally consistent. With sanctions, the main issue which arises is that some trade continues to be permitted, usually for humanitarian reasons, and generally involving medical products. But, while medical products can still be sold to Russia and Iran, for example, most banks refuse to handle the cash settlements related to these transactions. 

There can also be inconsistencies between different sanctioning regimes: the US still applies sanctions against Cuba, while most other countries do not. Even for Russia, members tell us the EU’s sanctions list is not fully identical to that of the US. 

To avoid potentially repeating legal considerations we cannot verify, we have decided not to produce a detailed report of our discussions, but to provide a list of the general conclusions and things to watch out for. The items below do not constitute legal advice, but rather, a list of things to beware of. As always, treasurers and their companies are responsible for ensuring compliance with all relevant and applicable laws, and obtaining professional advice.

• Most international banks will not handle even legal transactions with a sanctioned country. 
  • They have generally shut down their operations there, and so no longer have the resources or expertise to ensure compliance
  • The risk/reward ratio is not symmetrical. The financial benefit of processing these transactions is greatly outweighed by the potential penalties – regularly going into the hundreds of millions of dollars – for a single compliance failure. One French bank paid a $6bn fine several years ago.
  • This can mean that cash left over from former operations in a sanctioned country can