Bank founded by exile in Miami handles Cuba’s accounts for diplomatic posts in the U.S.
A bank with Cuban American roots in Miami has recently started handling the bank accounts for the Cuban Embassy in Washington, D.C., and the Cuban mission at the United Nations in New York.
First American Bank began handling the accounts in June, according to John Kavulich, the U.S.-Cuba Trade and Economic Council president. First American, with headquarters in Illinois, expanded its presence in South Florida after acquiring Miami’s Continental Bank in 2019.
Continental Bank was the first Cuban-American-owned bank in the United States, founded in 1974 by Carlos Dascal, who fled Fidel Castro’s revolution in 1961.
First American Bank acquired Cuba’s accounts after Centennial Bank, which had been handling the island’s accounts in the U.S., “severed all business relations” with the Cuban government following its support to Russia and its justifications to invade Ukraine, a source with knowledge of the situation told the Miami Herald. The source asked for anonymity to discuss sensitive financial matters.
Thomas E. Wells, chairman and CEO of First American Bank, said the institution does “not comment on our client relationships, recognizing their rights to confidentiality.”
Centennial had been providing services to the embassy and the mission since 2017 through its acquisition of Stonegate Bank, which received a special license from the Treasury Department to manage the accounts in 2015. Centennial also handled several other accounts of companies doing authorized business with Cuba.
The U.S. Treasury Department authorizes banks to handle transactions of the diplomatic missions of countries under sanctions. Still, at times, Cuba has had trouble finding a bank willing to do so because it is difficult and expensive for banks to navigate the sanctions laws and regulations.
On its annual report filed with the Securities Exchange Commission in February, the company that owns Centennial Bank, Home Bancshares., acknowledged the risk of keeping the Cuban accounts after the acquisition of Stonegate.
“We may have a higher risk of non-compliance with the Bank Secrecy Act and Anti-Money Laundering rules... and will likely need to more closely monitor transactions related to correspondent accounts in Cuba, potentially resulting in increased compliance costs,” the company said.
Centennial Bank did not reply to an email sent to an address listed on its website nor to messages left to its accounts on Twitter and Facebook. Calls to several branches were not answered. The bank does not provide media contact information on its website.
Donna Townsell, senior executive vice president at Home Bancshares, did not respond to voicemails left by the Herald requesting comment.
No direct banking to Cuba yet
Because of the U.S. embargo restrictions, financial transactions involving Cuba usually have to go through another bank in a third country. The Obama administration authorized U.S. banks and companies to open accounts in Cuba for transactions that fall under the law but stopped short of allowing Cuban entities to do the same in the U.S., a relationship known as direct correspondent banking.
First American Bank is currently negotiating with government-operated Banco Internacional de Comercio SA to open a correspondent account in Cuba, the source with knowledge of the matter said.
The Biden administration is working on the regulations to implement policy changes announced in May, including expanding electronic payments and increasing support for U.S. business activities with independent Cuban entrepreneurs. But it is unclear if U.S. officials will go as far as allowing a direct banking relationship with Cuba.
The May announcement received pushback from activists suspicious of any business dealings with Cuba, even if it primarily involves the private sector.
After the Cuban government said last week it would allow foreign investment in certain private businesses, Florida Gov. Ron DeSantis directed the Department of Economic Opportunity and Enterprise Florida to issue an alert warning state residents “not to let the communist Cuban regime steal their money through a recent scheme seeking to attract foreign investment for the ‘non-state sector,’” his office said in a statement.
In a first, U.S. government green-lights American investment in private business in Cuba
Kavulich, who heads a company that received a Treasury Department license to invest and provide financing to small private enterprises in Cuba, believes allowing direct banking relations should be the administration’s next “logical” step, given the license he received and the Cuban government’s subsequent announcement.
Potential investors and those providing financing in the U.S. to Cuban small private enterprises “must have a direct, efficient, and transparent means” to send funds to Cuba and receive their investment income, dividends and loan payments, Kavulich said.
“It will be nonsensical for the Biden administration to continue to require funds moving from Cuba to the United States to go through banks in third countries — where they then take a fee from every transaction,” he added.
