Cuba: A Complex Landscape for Money Laundering

The United States Department of State has highlighted Cuba’s vulnerabilities to money laundering in its latest report, despite the country’s efforts to combat this issue. The complex financial landscape and US sanctions continue to hinder Cuba’s integration into the international financial system.

Lack of Transparency a Major Concern

• The Cuban government’s opaque national banking and financial sector hampers efforts to monitor the effectiveness of its anti-money laundering (AML) measures.
• The absence of transparency in criminal investigations and prosecutions raises concerns about the country’s ability to effectively combat money laundering.

Vulnerabilities and Typologies

• Cuba’s geographic location between drug-supplying and drug-consuming countries makes it a potential hub for money laundering.
• Despite this, the country has limited foreign investment, a small international business presence, and no offshore casinos or internet gaming sites.
• The recently established special economic development zone at the port of Mariel is not currently an area of concern.

AML Laws and Regulations

• Cuba has legislation outlining regulations on enhanced customer due diligence for foreign politically exposed persons (PEPs), but it still exempts domestic PEPs from these regulations.
• The country also has bilateral agreements with several countries, including the US, to combat drug trafficking, although it is unclear if these agreements include mechanisms for sharing information related to financial crimes or money laundering.

AML Deficiencies

• Despite the low risk of money laundering, Cuba has several strategic deficiencies in its AML regime.
  • Lack of suspicious activity report (SAR) reporting from financial institutions and designated non-financial businesses and professions (DNFBPs).
  • Weak supervision and enforcement in these sectors.

Efforts to Combat Money Laundering

• The Cuban government has launched high-profile campaigns against corruption, investigating and prosecuting officials and foreign businesspeople.
• However, the country’s AML efforts are hindered by its lack of transparency, which makes it difficult to assess the effectiveness of these measures.

Enforcement and Implementation Issues

• Cuba has agreed to cooperate with the US on law enforcement matters, including counternarcotics, cybercrime, money laundering, and counterterrorism.
• However, the country’s reluctance to share information on financial crimes and its lack of transparency in criminal investigations and prosecutions raise concerns about its ability to effectively combat money laundering.

Conclusion

Cuba remains a complex landscape for money laundering, with both vulnerabilities and challenges hindering its efforts to combat this issue. While the government has taken steps to address these concerns, the lack of transparency and cooperation from financial institutions and authorities continues to pose a significant risk.