On New Years Day, Anniversary Of Defeat Of Batista, Trump Administration Sanctions Another Military-Controlled Bank In Cuba. More To Come?
/United States Department of State
Washington DC
Removing the Cuban Military’s Grip from Cuba’s Banking Sector
01/01/2021 09:40 AM EST
Michael R. Pompeo, Secretary of State
“Today, the Department of State is announcing the addition of Banco Financiero International S.A. (BFI) to the Cuba Restricted List, effective upon publication in early January. BFI is a Cuban military-controlled commercial bank that benefits directly from financial transactions at the expense of the Cuban people. The Cuban military uses BFI’s key role in foreign exchange to give military and state companies preferential access, secure advantageous exchange rates, and finance government-controlled projects that enrich the regime. The profits earned from these operations disproportionately benefit the Cuban military rather than independent Cuban entrepreneurs, furthering repression of the Cuban people and funding Cuba’s interference in Venezuela. President Trump has made it clear that he stands with the Cuban people in their longstanding struggle for freedom and against the communist regime in Havana. Adding BFI to the Cuba Restricted List furthers the Administration’s goal of preventing the Cuban military from controlling and benefiting from financial transactions that should instead benefit the Cuban people.”
Grupo de Administración Empresarial S.A. (GAESA) is a Revolutionary Armed Forces (FAR) of the Republic of Cuba-controlled umbrella enterprise with interests in the tourism, financial investment, import/export, and remittance sectors. GAESA’s portfolio includes businesses incorporated in Panama.
Financiera Cimex S.A. (FINCIMEX) is a financial investment and remittance company owned by GAESA and incorporated in Panama. FINCIMEX is authorized by the Central Bank of Cuba to finance export operations, conduct financial leasing operations, and handle commercial distribution of remittance cards. FINCIMEX was the distribution partner in the Republic of Cuba for Denver, Colorado-based Western Union Company (2020 revenues approximately US$5.5 billion) which electronically delivered annually transfers of reportedly valued in the hundreds of millions of dollars from the United States to the Republic of Cuba.
GAESA and FINCIMEX are already listed on the State Department’s List of Restricted Entities and Subentities Associated with Cuba (“Cuba Restricted List” or “CRL”). The CRL is a list of entities and subentities “under the control of, or acting for or on behalf of, the Cuban military, intelligence, or security services or personnel with which direct financial transactions would disproportionately benefit such services or personnel at the expense of the Cuban people or private enterprise in Cuba.”
GAESA and FINCIMEX are already on the List of Specially Designated Nationals and Blocked Persons by Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury pursuant to the Cuban Assets Control Regulations (CACR), 31 C.F.R. part 515.
Credit Card Usage
Purchase, New York-based Mastercard Incorporated removed its restriction for the Republic of Cuba on 1 March 2015. Financial institutions which authorized their Mastercard products (credit card and debit card) for use in the Republic of Cuba: Pompano Beach, Florida-based Stonegate Bank (2017 assets approximately US$2.9 billion); San Juan, Puerto Rico-based Banco Popular of Puerto Rico; and Fort Lauderdale, Florida-based Natbank. Unknown is how usage of Mastercard products within the Republic of Cuba have are impacted by United States government decisions relating to FINCIMEX and BFI.
Cuba Government Decisions
The Republic of Cuba will need to continue to evaluate options relating to FINCIMEX and now BFI, including the sale or transfer of the subsidiary to a non-FAR-controlled Republic of Cuba government-operated entity, such as a financial institution (Banco de Crédito y Comercio S.A. (BANDEC), Banco Popular de Ahorro S.A. (BPA), Banco Internacional de Comercio S.A. (BICSA), and Banco Metropolitano S.A.(BM)) each of which could seamlessly absorb and maintain Fincimex operations.
There is history for one Republic of Cuba government-operated financial institution transferring operations to another Republic of Cuba government-operated financial institution.
From Banco Metropolitano S.A.: “(“BM”) is a Cuban commercial bank that has presence only in Havana. Its corporate object is the pursuit of banking businesses, including but not limited to financial intermediation activities. BM started its operations in 1996 with a Havana branch office specialized in the provision of banking services solely to the diplomatic community, as well as the foreign natural and legal persons who were residents in Cuba. By resolution of Banco Central de Cuba (the Cuban Central Bank of “BCC,” for its Spanish acronym), BM’s corporate object, customer base, product portfolio and services were expanded effectively 2004 when BM acquired 30 offices hitherto held by Banco de Crédito y Comercio (“BANDEC,” for its Spanish acronym) and more than 50 offices hitherto held by Banco Popular de Ahorro (“BPA,” for its Spanish acronym), all located in Havana. As a result, BM established a representative presence in every municipality of the province of Havana.”
In 2015, 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, was vetted by the OFAC and approved for a correspondent banking relationship with Conway, Arkansas-based Home BancShares (2020 assets approximately US$14 billion) through its subsidiary Centennial Bank which in 2017 purchased Pompano Beach, Florida-based Stonegate Bank.
Stonegate Bank
In 2015, the OFAC authorized Pompano Beach, Florida-based Stonegate Bank (2017 assets approximately US$2.9 billion) to have an account with BICSA. In 2017, Home BancShares through its Centennial Bank subsidiary purchased Pompano Beach, Florida-based Stonegate Bank.
However, because the Obama Administration would not authorize BICSA under a license from the OFAC to have an account with Stonegate Bank, United States export-related funds were sent and received through Panama City, Panama-based Multibank, which had, but no longer has extensive dealings with the Republic of Cuba.
From Bogota, Colombia-based Grupo Aval on 16 June 2020: “On May 25th, Banco de Bogotá, through its subsidiary Leasing Bogotá S.A. Panamá, acquired 96.6% of the ordinary shares of Multi Financial Group. As part of the acquisition process, MFG’s operation in Cuba was closed and as part of the transaction. Grupo Aval complies with OFAC regulations and doesn't have transactional relationships with Cuba.”
