Financial Crime World

Cuba’s Financial Crime Landscape: A Look Inside

Despite being a small player in the global financial scene, Cuba has faced significant challenges in combating financial crime. In its latest report on money laundering and financial crimes, the United States Department of State highlighted several vulnerabilities and deficiencies in Cuba’s anti-money laundering (AML) regime.

Banking Sector Limitations

Cuba’s banking sector is largely government-controlled, with limited private activity and a lack of transparency. This makes it an unattractive location for money launderers looking to use financial institutions. However, the country’s cash-based black market and parallel economy present opportunities for criminal activity.

  • The report notes that Cuba’s geographic location, situated between drug-supplying and consuming countries, puts it at risk of being used as a transshipment point for illegal drugs.
  • The country’s limited foreign investment and small international business presence make it less susceptible to money laundering through financial institutions.

Efforts to Combat Money Laundering

The report noted that Cuba has made some efforts to combat money laundering, including legislation released in 2013 that outlines regulations for enhanced customer due diligence of foreign politically exposed persons (PEPs). However, this legislation exempts domestic PEPs from AML requirements. Additionally, Cuba is a member of the GAFILAT, a FATF-style regional body, but its most recent mutual evaluation highlighted several strategic deficiencies in its AML regime.

Areas for Improvement

The report identified several areas for improvement, including:

  • Greater transparency in financial transactions and criminal investigations
  • More robust supervision and enforcement in the non-profit organization (NPO) sector
  • Increased cooperation with international partners
  • Establishment of mechanisms for sharing information related to financial crimes

Progress and Challenges

Despite these challenges, the Cuban government has made efforts to combat corruption and money laundering. In recent years, it has launched high-profile campaigns against corruption, investigating and prosecuting officials and foreign businesspeople. However, there have been concerns about the lack of transparency in these investigations and prosecutions.

United States-Cuba Cooperation

The United States and Cuba have a Law Enforcement Dialogue aimed at promoting cooperation on counternarcotics, cybercrime, money laundering, and other transnational crimes. While progress has been made, the report highlighted several enforcement and implementation issues that need to be addressed.

Conclusion

Overall, while Cuba’s financial crime landscape presents challenges, it is an important step forward for the country to address these vulnerabilities and strengthen its AML regime.