July 3, 2014

Cuba calls U.S. fine on bank “an abuse”

Three other European banks are under U.S. scrutiny, according to news media report.

Cuba has criticized the $8.9 billion punishment slapped on the French bank BNP Paribas for violating U.S. sanctions, even as other European banks shut off their Cuba business or acknowledged that they, too, are under U.S. investigation.

BNP’s punishment, announced Monday by U.S. prosecutors in New York, is “an abuse of the sovereignty of states, the norms of free commerce and international right,” the Cuban Ministry of Foreign Affairs said in a statement Thursday.

U.S. prosecutions of entities in third countries for violating U.S. sanctions on Cuba and other nations amount to “an extraterritorial and illegal application of United States legislation,” the statement added.

BNP has pleaded guilty to violating U.S. sanctions on Cuba, Iran and Sudan by using U.S. dollars and its branch in New York for transactions from 2000 to 2010. It agreed to a record confiscation of $8.8 billion and a fine of $140 million.

Jorge Salazar, professor of economics at Florida International University, said the BNP case and others will likely have a negative impact on Cuba even if the government tries to replace U.S. dollars with euros or other currencies in its deals.

“Euros would be complicated because international commerce is basically in dollars,” Salazar said. “This would also complicate the liquidity of the Central Bank of Cuba and complicate the new law on foreign investments.”

The Bank of Ireland, meanwhile, confirmed that it has stopped processing transactions to or from Cuba, The Irish Independent newspaper reported Thursday.

Its international transactions are handled by an unidentified correspondent bank in the United States that is subject to Washington laws and regulations and therefore cannot violate the sanctions on foreign countries, the newspaper reported.

“As a result … we are not in a position to process such transactions,” the Bank of Ireland said in a statement to the newspaper. Also affected are payments in euros under a European Union coordination system called the Single Europe Payment Area.

The Agence France Press (AFP) news agency also reported Wednesday that at least three other major European banks “may be in the cross-hairs” of U.S. officials investigating violations of U.S. economic and other sanctions on several countries.

French bank Societe Generale recently acknowledged that it had opened an internal investigation and was in talks with the Office of Foreign Assets Control, the branch of that U.S. Treasury Department that enforces sanctions, according to AFP.

Another French bank, Credit Agricole is investigating its dollar transactions, AFP reported. And Germany’s Deutsche Bank had confirmed that it is providing U.S. regulators with requested information.

“While we cannot with any degree of certainty predict the effect these matters will have on us, they have the potential to result in the imposition of significant financial penalties or have other adverse consequences for us,” Deutsche Bank spokesman Michael Golden told AFP.

Switzerland’s fourth largest bank, the state-owned Zürcher Kantonalbank (ZKB), announced in January 2013 that it would stop doing business in Cuba to avoid the huge fines slapped on other European banks for violating U.S. sanctions.

The British bank HSBC agreed to pay $665 million in 2012 to settle allegations of breaking the sanctions on Cuba, Iran, Libya, Sudan and Burma. The Netherlands' ING bank was hit with $619 million in fines in 2011; Credit Suisse, with $539 million in 2009; and the Swiss UBS bank with $100 million in 2004.

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