Cuba will allow nonresidents to open accounts in its banks
A man and a woman change CUC and dollar bills on a street in Havana on December 10, 2019.
The Cuban government does not allow citizens who emigrate to vote or invest on the island, but it will now let them open accounts on the island’s banks in dollars.
The measure is an attempt to attract much needed foreign currency into the country when the coronavirus pandemic has shut down tourism and plunged the economy into a new low. And a little known exception included in the U.S. embargo tied to lawful travel to Cuba might allow it, although the answer is not straightforward.
A government resolution published in the island’s Official Gazette last week allows “natural persons” to open dollar accounts at the Banco Metropolitano S.A.; Banco Popular de Ahorro; and Banco de Crédito y Comercio.
The resolution repeals a similar one published in October last year that only referred to “natural persons residing in the country.” The state-run Cuban Press Agency confirmed that the change expands the possibility of opening accounts in foreign currency to nonresidents.
The resolution does not clarify whether non-Cuban citizens who do not live on the island would also have that same opportunity, but neither does it exclude them.
The accounts are linked to cards that can be used at dollar stores since October, but so far they only sell home appliances. This might change soon since the new resolution also leaves open the possibility for other government stores to sell in dollars.
The dollar accounts can also be used to import home appliances, auto parts and hardware from abroad through state companies.
The accounts can receive money in various foreign currencies, but the government imposes a 10 percent tax if U.S. dollars are deposited in cash.
The new regulation seems to cater to Cuban emigres who want to help their families on the island.
Magdiel Bustamante, 41, came to South Florida four years ago. He has five children in Cuba and travels there frequently.
He is thinking of opening a bank account on the island so that his family could buy home appliances, he told the Miami Herald.
“I think it is also a good option that would allow me to travel without so much cash within Cuba. The problem is that you cannot use [bank issued] cards at the or other private businesses,” Bustamante said.
DOES THE EMBARGO ALLOW IT?
Surprisingly, despite several rounds of tightening of the U.S. embargo against Cuba under the President Donald Trump administration, Bustamante might be able to open the account without violating U.S. laws.
Although the embargo generally prohibits financial transactions involving Cuba, there are many exceptions tied to legal travel to the island under one of the 12 categories currently authorized, including family travel.
If a Cuban American visits family in Cuba, opens the bank account there and uses it only while on the island for living expenses, the person would not be violating the embargo regulations, according to the Cuban Asset and Control Regulations (CACR) from the Treasury Department.
“Persons subject to U.S. jurisdiction who are traveling to Cuba pursuant to one of the 12 authorized categories of travel may open and maintain bank accounts in order to access funds located in Cuba for authorized transactions,” Treasury said in its most recent published guidance regarding Cuba sanctions.
The regulations clarify that while the U.S. person can keep the account, he or she won’t be able to access it or use it “unless the account holder is located in Cuba and is engaging in authorized transactions.”
The payment of living expenses and “the acquisition in Cuba of goods for personal consumption” are considered “authorized transactions.”
But this is when things get complicated.
Other embargo restrictions targeting the Cuban military might complicate those wanting to use the bank accounts to buy at stores in Cuba, including ones selling in dollars. Most are operated by CIMEX, a company linked to the military and included in a list of restricted entities kept by the State Department.
Travelers are “prohibited from engaging in direct financial transactions” with these entities, the Treasury Department says in its guidance.
So while opening a bank account in Cuba may be legal, using it to pay blocked companies is not.
Treasury would have a hard time keeping track of how a traveler uses a local bank account on the island, but the fear of violating the embargo might be enough deterrence for many.
Bustamante, who said he didn’t know about the embargo regulations, said he would not do “anything illegal that could jeopardize” his residency status in the U.S.
The Treasury Department did not reply to a request for comment. The State Department referred questions to Treasury.
WHO WANTS TO PUT MONEY IN A CUBAN BANK ACCOUNT?
But experts doubt emigres would be pouring money into the island’s banking system.
Amid a global pandemic, people are more cautious with their money. Remittances to the island have already dried up because many Cuban Americans, who send the most among Cubans living in other countries, have lost their jobs or seen their wages reduced.
In 2019, Cubans in the U.S. and other nations sent more than $3.7 billion to family and friends on the island, according to estimates from the Havana Consulting Group, based in
Miami. But the group notes that almost half of that amount reaches the island through informal channels, which have been affected by travel restrictions due to the coronavirus pandemic.
Experts also point to the lack of rights Cuban migrants face.
Cuban economist Elías Amor, who lives in Spain, warned of the legal vacuum surrounding Cubans residing abroad. Cubans staying longer than two years abroad are considered “emigres” and lose many rights like voting, access to the healthcare system, or traveling back to the island without government authorization.
“Be very careful with these accounts for nonresidents who lack the rights to litigate sanctions and [question] administrative processes. You have to be alert,” he said.
The lack of trust in the Cuban banking system and government was a common topic among social media users discussing the new measure.
“What guarantees do I have as a client that my USD account will not be frozen in the future?” asked a user with the Twitter handle @mike_timba. “Does the banking system have so much liquidity? If the problem worsens, can I withdraw all the money without problems?”
For Antonio Portilla, a Cuban who lives in South Florida, doing business with the island’s government “only has bad consequences.”
“The same country that stripped me of my residency because I decided to move to another place, that took away my right to inherit and to choose, now wants me to give it my dollars, which I earn with the sweat of my brow. I don’t think so,” he said.
Portilla, a doctor who abandoned an official medical mission in Central America to come to the U.S., also noted that the government would continue taxing dollars in the new bank accounts.
“It’s an insult,” he said. If you live in Cuba, “you have to buy [food and most items] in a currency that you don’t earn, and then they take away 10 percent of the money that your relatives send you. It’s too much.”