Informacion economica sobre Cuba

Banking woes ground some charter flights to Cuba

Despite U.S. opening toward Cuba, charter companies say it’s hard to get
payments to Cuba
Hold-up in wire transfers to Cuban accounts results in several canceled
Charter companies say banks are being overly cautious

Last month as it always does, Island Travel & Tours, which offers air
charter service between three Florida cities and Cuba, asked its local
bank to request a $35,000 wire transfer to pay the Cuban government $194
per passenger for landing fees and for mandatory health insurance for

Although the route of the money is a bit circuitous because of the
embargo — the local bank asks a major correspondent bank to transfer the
money to a Cuban account in a third country — it’s a procedure that Bill
Hauf, president of the charter company, has been following for years.
The money, he said, generally arrives in a day or two at most.

But this time, he said, four, then five days passed and the wire
transfer still hadn’t been completed. Because he had other flights
coming up and the Cuban government wants payment in full before a
charter flight lands, he also requested transfers of $65,000, $100,000
and $50,000 to cover them. Those transfers also were delayed.

Hauf said it took numerous phone calls to the U.S. Treasury’s Office of
Foreign Assets Control, his local bank and Chase — the correspondent
bank that handles the transfers — before the problem was resolved. While
he was waiting for a solution, he had to cancel a week of flights to
Cuba because his payments hadn’t arrived in time.

And he is not alone. Other companies that need to transfer money to
Cuban accounts to pay for flights, hotels, guides and rental cars also
complain that since the rapprochement between the United States and
Cuba, their wire transfers to Cuba have slowed to a snail’s pace and
they have been peppered with extraneous questions about passengers,
flights and itineraries that can further delay money transfers.

Under the opening toward Cuba outlined in December by President Barack
Obama, Americans who fall into 12 categories ranging from those on
educational and humanitarian activities to those taking part in sports
and cultural events are allowed to visit Cuba without seeking prior
approval from OFAC. (Cuban Americans are allowed to travel freely to the
island as long as the Cuban government approves their visas.)

The onus of deciding whether Americans were authorized travelers used to
fall to the air carriers. Under the new rules, the burden of proof as to
whether travelers fit into the 12 categories falls on them — although
all they have to do is check off a box on a form certifying which
category they are traveling under.

But now Daniel French, general manager of Blanco International, a Miami
charter company that had two of its Cuba flights canceled because of a
delay in wire transfers, says that with all the questions they ask, it
seems like the banks are taking it upon themselves to decide who is
authorized to travel to Cuba.

“I keep telling myself [restoration of diplomatic relations with Cuba]
is really great; we’ve been working for it for a long time. But what’s
going on with the banks is very contradictory, and it’s a potential
stumbling block in the process of normalization,” said Bob Guild, vice
president of New Jersey-based Marazul Charters, which offers charters
from Miami to various Cuban cities.

Guild said that Marazul has “certainly had similar problems” with wire
transfer delays but that it has never reached a point where a Marazul
flight had to be canceled. “We call up the banks and try to find out
what’s going on and then we call the attorneys and ask them to
intervene,” he said. “The last couple weeks have been relatively smooth
for us. Will it happen again? I wouldn’t bet against it.

“Under the opening toward Cuba, the administration advised us that we
would be able to make direct payments to Cuba and use U.S.-issued credit
cards in Cuba. All those things have been talked about but it hasn’t
happened,” Guild said.

Only Pompano Beach-based Stonegate Bank, which signed a correspondent
banking deal with a Cuban bank in July, has availed itself of the new

“Obama may have changed the banking and travel regulations but I don’t
think the word has gotten down the pipeline to the banks,” said Vivian
Mannerud, who books travel services to Cuba. She said she’s even heard
of banks asking for a travel provider’s OFAC license number before
transferring money. Under the new rules, specific licenses are no longer
required and no one has a license number.

French, of Blanco International, which has been offering charter flights
to Cuba for the past 20 years, said wire transfers involving Cuba have
always been slow. What has changed in his view is the Cubans’ attitude
toward tardy payments.

Cuba used to be more accepting about wire transfer delays, he said, and
as long as Havanatur Celimar knew a payment was in progress, there
wasn’t a problem with landing rights. But now, French said, “The Cuban
goodwill has run out; they are enforcing the contracts.”

During a United Nations speech on Oct. 27, just before the U.N.
overwhelmingly voted to support a resolution condemning the U.S.
embargo, Cuban Foreign Minister Bruno Rodríguez mentioned not only U.S.
banks’ holding up payments by charter companies but also said that the
first payment to Cuba by Sprint to begin direct roaming service on the
island had been delayed and that SWIFT, a global messaging network that
financial institutions use to transmit instructions and information
securely, had recently canceled its contract with Cuba.

Even though the United States has removed Cuba from its list of state
sponsors of terrorism, which eliminates some financial sanctions against
the island, and Obama has said he wants to work with Congress to lift
the embargo, Rodríguez said: “We shouldn’t confuse reality with the
desires and expressions of goodwill. Matters such as these can only be
judged by actions. Ten months after the announcement of Dec. 17, there
hasn’t been any tangible, substantial modification in the application of
the blockade.”

The day after Rodríguez’s U.N. speech, French said he received an email
from the Cuban Embassy letting him know that payments had to be made on
a timely basis. “Cuba’s position is they won’t provide services if money
doesn’t arrive on time,” he said. At 5 p.m. Oct. 30, French was informed
that Blanco International’s landing rights for its Sunday flight had
been canceled. His Monday flight was canceled for the same reason.

“I’ve seen Chase hold up a lot of our clients’ monies,” said Augusto
Maxwell, a Miami lawyer who heads Akerman’s Cuba practice. “But they
usually release them in a few days after they get a greater degree of

Hauf said other banks also are asking charter companies questions that
aren’t on point, delaying wire transfers. Chase, he said, asked for
passengers’ itineraries in Cuba. “We take many Cuban Americans on our
flights. We don’t ask them where they are having breakfast with their
families,” Hauf said. “Every question can hold up the payments four or
five days at a time.”

Cuban authorities canceled the first Island Travel flight on Oct. 21 and
the payment problem wasn’t resolved until Oct. 28 when the company’s
flights resumed.

Blanco International also is back in the air, but French said he’s now
trying to send money 15 to 20 days in advance and is exploring doing
business with a bank that doesn’t use Chase as its correspondent bank.

“Our reputation is being affected by this wire transfer problem,” French
said. Not all of his U.S.-bound passengers could immediately be
rebooked, leaving some stranded in Havana for a few days, he said. “The
panic happens in Havana when people are trying to get home.”

When Hauf informed travelers at Miami International Airport that their
Island Travel flights had been canceled, he had a police escort. “People
were very upset; they were angry,” he said. “I sold them the tickets, so
I had to try to make it right — even though it wasn’t our fault.”

Island scrambled to get passengers booked on other charters — no easy
task because many flights are full during the high season, or refund
their fares. Also adding to his costs were attorney fees and putting up
out-of-town passengers at hotels until their rebooked flights departed.

“Why are the banks doing this when OFAC has told them this travel is
legal?” Hauf said. “It’s a serious problem.”

JPMorgan Chase declined to comment.

“The challenge for banks is two-fold,” Maxwell said. “On one hand,
they’ve been so drilled to avoid Cuba because the fines against some
banks have been so staggering. Then on the other hand, the rules are
brand-new and somewhat open-ended, giving some banks vertigo.”

In some cases, he said, bank software set to flag Cuba transactions and
bank staff still need to be updated on the new regulations governing
banking and commerce with Cuba.

“I’m not really terribly surprised [that banks’ are holding up wire
transfers],” said Fernando Capablanca, managing director at Whitecap
Consulting Group. “Once a bank starts to prevent something from
happening, it’s very difficult to unwind.”

The volume of money being sent to Cuban accounts and the number of
companies making payments also have increased, perhaps adding to banks’
queasy factor, Maxwell said.

Meanwhile, analysts said perhaps the biggest reason banks are wary of
Cuba business are the huge — and recent — fines aimed at banks that have
done business with sanctioned countries. Just last month, France’s
Crédit Agricole bank paid nearly $800,000 to U.S. state and federal
agencies to settle allegations it tried to hide or obscure references to
transactions involving U.S.-sanctioned nations, including Cuba.

Maxwell said it is his understanding that the ongoing settlements have
to do “with egregious violations that occurred in the past. These are
long-standing investigations that are working their way through the system.”

In 2011, Chase agreed to pay more than $88 million to settle an OFAC
investigation into wire transfers to Cuban nationals in late 2005 and
early 2006 that totaled around $178.5 million.

“The banks are scared and I don’t blame them either,” French said. But
in the meantime, he said, OFAC needs to provide very clear instructions
on how banks should proceed with matters related to Cuba travel and

“We continue to work with financial institutions and industry to clarify
our regulations so that they can appropriately comply with our
regulations,” the Treasury said in response to a Miami Herald inquiry.
“In line with the president’s policies, OFAC’s regulatory changes over
the past year underscore our commitment to empowering the Cuban people.
As part of this, we are focused on facilitating authorized travel and
commerce, to enhance engagement between Americans and Cubans, and
improve the lives of the Cuban people. As with all of our regulations,
it is our priority to make them as effective as possible.”

In his recent remarks at the United Nations, Ronald Godard, U.S. senior
area adviser for Western Hemisphere Affairs, said progress had been made
in the U.S.-Cuba relationship. Still, he said, “fully normalizing our
bilateral relationship will require years of persistence and dedication
on both sides.”

Source: Banking woes ground some charter flights to Cuba | Miami Herald

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