As a component to the continuing series of regulatory changes implemented by the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury, the Obama Administration is preparing to authorize Republic of Cuba government-operated financial institutions to have correspondent accounts with financial institutions located in the United States.
The purpose of the regulatory change is to further the efficiency of the commercial payment process for exports from the United States to the Republic of Cuba and for the transfer of funds related to travel by individuals subject to United States law to the Republic of Cuba, specifically United States-based air carriers that will commence regularly-scheduled flights to the Republic of Cuba in 2016.
There remains concern that funds contained in a bank account established in the United States by a Republic of Cuba government-operated bank (or other entity) could be subject to civil action by an individual with a claim against the government of the Republic of Cuba.
In 2015, Pompano Beach, Florida-based Stonegate Bank (2014 assets approximately US$2.3 billion) signed a Direct Correspondent Banking Agreement with Republic of Cuba government-operated Banco Internacional de Comercio SA (BICSA), a member of Republic of Cuba government-operated Grupo Nuevo Banca SA, created by Corporate Charter No. 49 on 29 October 1993 and commenced operation on 3 January 1994.
Stonegate Bank also provides commercial operating accounts for the Embassy of the Republic of Cuba in Washington, DC.
Statutes, and Regulations issued by the OFAC have required that transactions relating to commercial exports from the United States to the Republic of Cuba be subject to a triangular payment process.
The Republic of Cuba-based entity places an order with a United States-based company. The Republic of Cuba-based entity then either transfers funds from the Republic of Cuba to a third country financial institution or uses existing funds in a third country financial institution. The third country financial institution transfers the funds to a financial institution (either within the United States or another country) selected by the United States-based company. This process generally takes two to five days (if a weekend, for example) and there are transfer costs to the Republic of Cuba-based entity and United States-based company.
With the Stonegate Bank/BICSA Agreement, the Republic of Cuba-based entity would transfer funds (using SWIFT codes) from its account at BICSA directly to Stonegate or would use existing funds at the BICSA account at Stonegate. The funds would then be transferred from Stonegate to the financial institution selected by the United States-based company. The process generally can be confirmed during a business day; and the transfer costs are lower for both seller and buyer.