A bank with Cuban-American roots recently began managing the bank accounts of the Cuban embassy in Washington DC and the Cuban mission to the United Nations in New York from Miami.
First American Bank began handling the accounts in June, according to John Kavulich, president of the US-Cuba Economic and Trade Council. Illinois-based First American Bank expanded its presence in South Florida after acquiring Continental Bank of Miami 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 the Cuba accounts after Centennial Bank “cut all business relations” with the Cuban government over its support for Russia and its justifications for invading Ukraine, a source with knowledge of the situation told the Herald. The source requested anonymity to discuss sensitive financial matters.
Thomas E. Wells, president and CEO of First American Bank, said the bank “does not comment on our customer relationships, recognizing their rights to confidentiality.”
Centennial Bank had been providing services to the embassy and mission since 2017 through the acquisition of Stonegate Bank, which received a special license from the Treasury Department to manage the accounts in 2015. Centennial also handled other accounts for companies conducting authorized business. with Cuba.
The US Treasury Department authorizes banks to handle transactions for the diplomatic missions of countries under sanctions. Still, Cuba has at times struggled to find one willing to do so because it’s difficult and costly for banks to navigate embargo laws and regulations.
In 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 Stonegate acquisition.
“We may have a higher risk of non-compliance with the Bank Secrecy Law and anti-money laundering regulations… and we may need to more closely monitor transactions related to correspondent accounts in Cuba, which could result in a rising costs,” the company said.
Centennial Bank did not respond to an email sent to an address listed on its website or to messages left on its Twitter and Facebook accounts. Calls to various branches went unanswered. The bank does not provide contact information for the press on its website.
Donna Townsell, senior executive vice president of Home Bancshares, did not respond to voicemails left by the Herald requesting comment.
There is no direct banking to Cuba yet
Due to embargo restrictions, financial transactions involving Cuba generally have to go through another bank in a third country. The Obama administration authorized US banks and companies to open accounts in Cuba for legal transactions, but stopped short of allowing Cuban entities to do the same in the United States, a relationship known as direct correspondent banking.
First American Bank is currently negotiating with the state-owned Banco Internacional de Comercio SA to open a correspondent account in Cuba, the source with knowledge of the matter said.
The Joe Biden administration is working on regulations to implement the policy changes announced in May, including expanding electronic payments and increasing support for American business activities with independent Cuban entrepreneurs. But it is unclear whether officials will go so far as to allow a direct banking relationship with Cuba.
The May announcement was rebuffed by activists who are suspicious of any business dealings with Cuba, even if it primarily involves the private sector.
After the Cuban government said last week that it would allow foreign investment in certain private businesses, Florida Governor Ron DeSantis ordered the Florida Department of Economic Opportunity and Enterprise to issue an alert warning state residents “not to allow the Cuban communist regime to steal your money through a recent scheme that seeks to attract foreign investment for the ‘non-state sector,'” his office said in a statement.
Kavulich, who runs a company that received a license from the Treasury Department to invest and finance a small private business in Cuba, believes that allowing direct banking relationships should be the administration’s “logical” next step, given the license that received and the subsequent announcement from the Cuban government.
Investors and those who provide financing in the United States to Cuban small private companies “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 would not make sense for the Biden administration to continue to require funds moving from the United States to Cuba to go through banks in third countries, where they then charge a fee for each transaction.”
This story was originally published on July 26, 2022 4:41 p.m.