Thursday, 3 January 2013
Obama to ease embargo? Don't bank on it
Ideas that President Obama has eased the embargo on Cuba are wide of the mark. Although he has relaxed some travel restrictions to the island, in fact the Obama first term saw an increase of financial pressure on Cuba, not a lessening.
This has been most marked in the avid application of fines on foreign banks who do business on the island.
Pressed by Washington, recently Switzerland’s fourth-largest bank dropped its business with Cuba, Swiss media has reported.
Zürcher Kantonalbank (ZKB), which is state-owned, had picked up a Cuba portfolio after Swiss banking giants UBS and Crédit Suisse canceled their business with the island seven and five years ago, respectively.
The Obama Administration has increased the financial pressure on Cuba, partly as a side effect of a crackdown on Iran and drug-related money laue Treasndering. Thury Department’s Office of Foreign Assets Control (OFAC) recently issued a record fine of $1.9 billion to Britain’s HSBC over alleged money laundering in Mexico and violations of the U.S. embargo.
ZKB “cannot avoid paying attention to embargoes and blacklists,” a bank spokesman told finance newsletter Inside Paradeplatz. “After prominent competitors bid farewell to the Cuba business long ago, due to the U.S. embargo, Zürcher Kantonalbank is now pulling out of Cuba for the same reason.”
The Kantonalbank move happened just as the U.S. government is investigating the role of Switzerland’s largest banks in tax evasion by U.S. citizens.
UBS in 2004 paid the United States a fine of $140 million, after the bank had swapped old dollar bills for new ones for Cuba-related customers.
Biggest fines of the banking world since 2009
1. $1.9 billion, HSBC, December 2012. Charge: Accused of money laundering activities tied to drug cartels in Mexico, terror-linked groups in Saudi Arabia.
2. $667 million, Standard Chartered, August and December 2012. Charge: Violating U.S. sanctions on transactions with Iran, Burma, Libya and Sudan.
3. $619 million, ING Bank NV, June 2012. Charge: Covering up fund transfers in violation of U.S. sanctions against Cuba, Iran.
4. $536 million, Credit Suisse, December 2009. Charge: Allowing clients in Iran, Libya, Sudan, Myanmar and Cuba to conduct financial transactions.
5. $470 million, Barclays, November 2012. Charge: Rigging electricity market.
6. $450 million, Barclays, June 2012. Charge: Manipulating bank Libor rates.
7. $350 million, Lloyds TSB Group. Charge: Allowing Iranian and Sudanese clients access to the U.S. banking system.
8. $335 million, Bank of America, December 2011. Charge: Racial discrimination in lending rates.
9. $298 million, Barclays, August 2010. Charge: Allowing client payments from Cuba, Sudan.
10. $275 million, JPMorgan Chase, February 2012. Charge: Problems in mortgage servicing business.
11. $233 million, Royal Bank of Scotland, June 2012. Charge: Manipulating bank Libor rates.
12. $207 million, Ally Financial, February 2012. Charge: Problems in mortgage servicing business.