US Department Of State Report On Money Laundering And Financial Crimes: Cuba
/United States Department of State
Bureau for International Narcotics and Law Enforcement Affairs
International Narcotics Control
Strategy Report
Volume II
Money Laundering and Financial Crimes
March 2017
Cuba (Page 71)
OVERVIEW
Cuba is not a regional financial center. Cuban financial practices and U.S. sanctions continue to prevent Cuba’s banking system from fully integrating into the international financial system.
The government-controlled banking sector, low internet and cell phone usage rates, and lack of government and legal transparency render Cuba an unattractive location for money laundering through financial institutions. The centrally-planned economy includes limited private activity. A significant cash-based black market operates parallel to the heavily subsidized and rationed formal market dominated by the state.
The Government of Cuba does not identify money laundering as a major problem. Cuba should increase the transparency of its financial sector and expand its capacity to fight illegal activities. Cuba also should increase the transparency of criminal investigations and prosecutions.
VULNERABILITIES AND EXPECTED TYPOLOGIES
Cuba’s geographic location puts it between drug-supplying and drug-consuming countries. Cuba has little foreign investment, a small international business presence, and no offshore casinos or internet gaming sites. Cuba’s first special economic development zone at the port of Mariel in northwestern Cuba was established in November 2013 and is still under development; it is not currently an area of concern. There are no known issues with or abuse of NPOs, alternative remittance systems, offshore sectors, FTZs, bearer shares, or other specific sectors or situations.
KEY AML LAWS AND REGULATIONS
Legislation released in 2013 outlines regulations regarding enhanced customer due diligence of foreign PEPs, although it continues to exempt domestic PEPs from the reach of the legislation.
Cuba has bilateral agreements with a number of countries, including the United States, related to combating drug trafficking. It is unknown if any of these agreements include mechanisms to share information related to financial crimes or money laundering.
The United States and Cuba do not have a formal records-exchange mechanism in place but, under the Law Enforcement Dialogue process, have developed a mutual legal assistance relationship as part of the legal cooperation technical exchange and have established direct communication between DEA and its Cuban counterpart to focus on counternarcotics cooperation.
Cuba is a member of the GAFILAT, a FATF-style regional body. Its most recent mutual evaluation can be found at: http://www.fatf- gafi.org/publications/mutualevaluations/documents/mer-cuba-2015.html
AML DEFICIENCIES
Although the risk of money laundering is low, Cuba has a number of strategic deficiencies in its AML regime. These include a lack of SAR reporting to its FIU from financial institutions and DNFBPs and weak supervision and enforcement in the DNFBP and NPO sectors.
These deficiencies stem from Cuba’s opaque national banking and financial sector, which hampers efforts to monitor the effectiveness and progress of Cuba’s AML efforts. Cuba should increase the transparency of its financial sector. Cuba should ensure its CDD measures and SAR requirements include domestic PEPs, all DNFBPs, and the NPO sector, and create appropriate laws and procedures to enhance international cooperation and mutual legal assistance. Cuba also should increase the transparency of criminal investigations and prosecutions.
The U.S. government issued the Cuban Assets Control Regulations in 1963, under the Trading with the Enemy Act. Between January 2015 and October 2016, the Departments of Commerce and the Treasury significantly modified sanctions regulations, with the easing of restrictions on authorized travel, commerce, and financial transactions. The embargo remains in place, however, and the sanctions regulations still restrict travel for “tourist activities,” as well as most investment and the import of most products of Cuban origin. With some notable exceptions, including agricultural products, medicines and medical devices, and certain non-sensitive telecommunications equipment and consumer communications devices, most exports from the United States to Cuba require a license. Additionally, U.S.-based assets in which Cuba or the Cuban government have an interest are blocked by operation of law, in the absence of a license.
ENFORCEMENT/IMPLEMENTATION ISSUES AND COMMENTS
The Cuban government has run high-profile campaigns against corruption in recent years, investigating and prosecuting Cuban officials and foreign businesspeople. Cuba also is continuing its efforts to investigate and prosecute cases of money laundering. There are press reports of Cuba prosecuting and convicting individuals for money laundering and related offenses as recently as December 2016, but Cuba released no official reports of prosecutions or convictions for money laundering in 2016.
Cuba has agreed to continued cooperation and to the establishment of mechanisms to promote cyber-security and to combat terrorism, drug-trafficking, trafficking and trade in persons, money laundering, smuggling, and other transnational crimes. The United States and Cuba have a Law Enforcement Dialogue with technical exchanges on counternarcotics, cybercrime and cybersecurity, money laundering and associated crimes, counterterrorism, and legal cooperation.
