Sending money to Cuba proving troublesome

havana-live-sending-money-dollarsHAVANA, Nov. 12th   Amid a new era of diplomatic and commercial relations with Cuba has come reports of problems with payments between U.S. and Cuban businesses.

The Miami Herald reported on Sunday that tour operators that need to transfer money to Cuban banks to pay in advance for flights, accommodations, and local transportation are finding their wire transfers to Cuba have slowed or stopped.
Banks are asking charter companies to provide details of passengers’ itineraries before they will process payment to the Cuban travel agency, Havanatur Celimar, that authorizes landing rights.

The Miami Herald reported Sunday that the day after a speech from Cuban Foreign Minister Bruno Rodríguez at the United Nations critical of U.S. policy, charter tour operator Daniel French said he received an email from the Cuban Embassy telling him that, going forward, all payments had to be made on a timely basis. As a result of delays in the transmission of wire transfers for his upcoming flights, French’s landing rights for two upcoming flights were canceled.

In an interview French told MarketWatch, “Cuba’s goodwill has expired.”

The Cuban Embassy in Washington DC did not respond to a request for comment via email or phone.

Rodríguez also said that SWIFT, the global messaging network that financial institutions use to transmit wire transfer instructions and information securely, had recently canceled its contract with Cuba.

It’s no wonder big banks are still skittish about sending dollars to Cuba. Banks are still being sanctioned this year for doing business with Cuba in the past. French bank Credit Agricole ACA, -1.36% was fined $787 million in October by the Department of Justice for allegedly processing $32 billion in transactions between 2003 to 2008 that violated US sanctions related to Cuba as well as Iran, Sudan and Myanmar. Germany’s Commerzbank AG CBK, -2.21% paid $1.45 billion in fines in march to settle allegations of processing transactions on behalf of Cuba, Iran, Sudan and Myanmar.

In 2011 J.P. Morgan Chase JPM, -1.56% agreed to pay $88 million for processing 1,711 electronic funds transfers to Cuban government agencies or Cuban nationals worth $178 million for what the government said was an “apparent violation of the prohibition against dealing in property in which Cuba or a Cuban national has an interest.”

French says his company has been processing transfers using third-party banks for more than twenty years and that the process has always been slow. What’s different now is that the big banks are taking a bigger role in checking the details of the transaction, and Cuba is no longer putting up with late payments.

A Chase spokeswoman declined comment. However, a source at the bank knowledgeable about the situation said that increased wire transfer demand alone may be making it hard for everyone involved to process the larger volume at even the slow but ultimately reliable pace as in the past.

The U.S. Treasury’s Office of Foreign Assets Control is the last word on whether any sanctions that remain between the U.S. and Cuba stay put and is the only one that can assuage any fears banks have going forward in processing transactions on behalf of U.S. businesses that want to take advantage of the rapprochement with Cuba.

A Treasury spokesperson said that they “continue to work with financial institutions and industry to clarify our regulations so that they can appropriately comply with our regulations. As with all of our regulations, it is our priority to make them as effective as possible.”