This Week in AML
The Office of Foreign Assets Control (OFAC) has issued updated FAQs clarifying the regulations about people in the US sending electronic remittances to Cuba. This update is particularly timely given the recent devastating hurricane damage. John and Elliot review the key elements of the updates. They discuss the approved channels, the persons authorized to send and receive payments, and how banks and other service providers can meet their obligations under the rules.
Can I Send a Remittance to Cuba? TRANSCRIPT
Elliot Berman: Hi John. How are you today?
John Byrne: Hi, Elliot. It sounds like I'm doing a little better than you. How are you feeling?
Elliot Berman: I feel fine, but I've got a, clearly have a head cold or something, and so, you can hear it in my throat and nose. But I don't feel bad, so hopefully, it'll pass quickly.
John Byrne: Yep. So, heading to Puerto Rico in the morning for a couple of events. That island obviously has been harmed greatly by the hurricane.
But in the San Juan area, I've been told that it's a little more navigable or whatever. But our advisory board member, Marilu Jiménez, will receive an award for her work with Homeland Security and her great work on the island in the AML space. So that's great. And then the next day, she and I are gonna be doing some training for bank examiners, some extensive training, and a whole host of issues. So looking forward to that. Again, I know that travel's always dicey, but I think, next week after we're back, hopefully, I'll be able to report back on some good things there. So that's all going on, which leads me to our conversation today.
Cuba is also getting hammered by the hurricane as we speak, actually, as we record this. And one of the things that I saw in my newsfeed today that was actually issued yesterday was a new FAQ from OFAC. And OFAC does these, you know, constantly, and they're really good at providing information, but this is to the Cuban Assets Control Regulations. Obviously, Cuban sanctions are an area that becomes, over time, very difficult to navigate. You need to, really, obviously, stay up to speed. There are some FAQs that talk about how you can provide funds for educational purposes for research purposes, but this is specifically about sending remittances using digital payments, and that's gonna become pretty important.
To get monies to the island from family. And friends to help people. So the fact that this came out, I'm sure, is not a coincidence.
Elliot Berman: No. And the definition that FinCEN uses, or I'm sorry, OFAC uses for digital transmission, is very broad. Which, in this case, is a good thing.
There's always the depending on how badly Cuba is, damaged by the storm, whether or not the networks at the receiving end will be up and functioning, whether that's cellular networks or banking networks. But at least there is a process. And when you look at the definition of what remittances are allowed?
The first three really speak specifically to the current instance. The first is family remittances. So, you know, people from the US, subject to US jurisdiction who are 18 years or older, can send to family members that are defined. But it's also a reasonably broad definition.
Generally, you're gonna catch many people that you would think you would, donative remittances. So you can do that. And then remittances to certain individuals and independent non-governmental organizations in Cuba. And those would be the NGOs. Many of those will be the NGOs on the ground trying to help people, and the communities put themselves back together.
So, pretty broad. There are some other categories that are allowed, but these are the three in particular. Square on what we're talking about here.
John Byrne: Yeah. They also remind us that OFAC general licenses are self-executing. And that's, of course, that you can assess that the transactions fall within the scope without getting further permission if you will, assurance from OFAC.
But there's a line or two lines in there that I thought was important to repeat for our bank clients because you gotta, as they say, navigating this is, it's always a challenge. You don't wanna be on the other side of a sanctions prohibition, but a banking institution is expected to conduct a level of due diligence.
They say that's commensurate with its overall risk profile and its internal compliance policies and procedures, that obviously a statement that's correct on many levels that they say, however, is noted in the FAQ, actually banking institutions, including the US, registered money transmitters, may rely on the statements of their customers that remittance transactions are authorized unless they know or have reason to know a transaction is not authorized.
Now, that sounds, have to use the word again, reasonable, but obviously, you know, the proof is in the enforcement there. So, obviously, OFAC is trying to. This is an easier process, but still, the bank has to make a decision based on their previous experience with their customers, you know, in terms of the information that they have provided and validate that information.
But I thought that was particularly interesting. And they go on to say that they don't authorize transactions. , Related to collect forward a receipt of REITs involving any entity that's identified. Obviously on the state department's Cuba restricted list. There's a lot there. You know, our sanctions experts in our community obviously know this space really well.
But I do think OFAC deserves a lot of credit, as they have, over time, provided a lot more information that includes, I would argue compliance direction than they really ever did, you know, say five, ten years ago.
Elliot Berman: Yes. It's been a conversation that has been ongoing in the community between members of the community and the trade associations, as well as parts of the treasury department and the bank regulators.
And this is a nice example of timely real-world assistance when people are scurrying to figure out what I can do and how I can do it in an emergency.
John Byrne: Right. And as I referenced if you go back, there was a release in June, on June 9th, that talks about educational activities. Cause I know from talking to some of our clients, When there was a lot of confusion, specifically in the last administration in terms of, you know, college groups and other research groups that would go to Cuba in terms of how a financial institution could.
Provide loans or funds there. There are a lot of questions about that. So there's a lot of information in this June notice that, I'm sure again, a sanctions expert aware of. But for those that sort of dabbling in this professional research, professional meetings there, you know, if gonna organize a meeting or a conference, Bless you.
Thank you. You must, must be related to the organization. And must be an employee or a contract. So there's a lot of good information in there that I think will definitely help if that's how you interact with travel and funding in Cuba.
Elliot Berman: Yes. So what do you have in the pipeline for the coming weeks?
John Byrne: Well, a couple of things we just posted, a very fun interview I did with a friend of mine, Sarah Beth Felix, who runs her own consulting firm. She is also creating a bank in Vermont, and that interview is on our Empowering Together Women in AML series. So it's on that. Also, coming up toward the end of the month, we'll be working with some experts in the antiquity space to get their take on that world.
We've done some things in the past on that. We're gonna do some more. We're gonna have a webinar in October. We just got commitments from two really great experts, Megan Hodge from Ally Bank and Dan Stipano, former OCC enforcement lawyer and former deputy director. We're gonna talk about AMLA.
Obviously, as you know, it's been a slow process in terms of everything from priorities to national risk assessment. But these folks, Megan for within an institution and Dan who advises institutions. We'll talk at length about what they're recommending, and maybe, who knows, maybe by then, there'll be some new regs that we could also discuss as
Elliot Berman: Yes, and you'll be able to register for that webinar at the beginning of next week. So watch our website and our LinkedIn page, and you'll have an opportunity to save a seat and listen to them. John, you travel safely. Okay?
John Byrne: All right, Elliot. Feel better, man.
Elliot Berman: All right. Bye-bye.
John Byrne: See ya.