This Week in AML

New Cuban Sanctions

This week, Tim White and John Byrne discuss the recently imposed sanctions on Cuban officials by the Biden Administration 



New Cuban Sanctions TRANSCRIPT

John Byrne: I'm here with Tim white for another edition of This Week in AML. Tim and I are doing something we haven't done basically in a year and a half. We're speaking to a live audience at the Independent Banks of Colorado. It's a BSA mile-high summit. Tim is speaking on sanctions, and I am talking about AML reform.


We're taking a quick break here because we wanted to talk about a sanctions release that happened over the weekend. As we know, the sanctions tools are very much utilized in a national security sense. This one was directed against Cuba and some individuals in Cuba.

Tim, fill us in a little bit about what happened.  


Tim White: So, first of all, I think most of us are all aware that there's been a lot of protests and demonstrations both in Cuba and in Washington.


The Biden administration wanted to make a real statement here to say that the United States supports the free press and the freedom of speech and rights in Cuba. And it needed to do something besides, hey, we've had sanctions in place against Cuba the revolution back in '62.


I think one way to do that was, specifically naming two individuals that were the Director and the Deputy Director of the Revolutionary Police, as opposed to just saying, hey, we're sanctioning the Cuban government. This time they're picking a couple of people. That specifically says we know these people are a part of the crackdown.


I think what's also important is the fact that this was done under the Global Magnitsky Sanctions Program, which is specifically targeting human rights abusers. So, it wasn't like, let's throw another layer in on the Cuban asset control regulations. It was, hey, and now we're saying specific human rights stuff.


Biden has been very pro-opening relationships with Cuba. But I think this is a real political football because Florida is such a swing state and the ex-pats in Florida are very adamant. They don't want to see a soft US government against Cuba. So, I think those are the key points.


John Byrne: So, I agree with all of that, obviously. Tell us from a practical standpoint, what do these sanctions do against two individuals? 


Walk us through that.


Tim White: Well, I think, first of all, it makes a statement both here in the United States, as well as to the people of Cuba.


John Byrne: Sure, statements I get. But in terms of those two individuals, what happens?


Tim White: You're going to have every financial institution, brokerage firm, and insurance firm running these names through their databases. And if they do have funds parked in the United States, which would not be a long stretch.


To say, hey, I'm, I'm shifting my money, whether it's legit money or corrupt money to the United States and parking it, these two individuals may be going, oh, I've just got all of my money frozen in the United States. Maybe I'm going to change my behavior. Maybe I'm going to back off here a little bit. That's what we would like to see happen.


John Byrne: So, let me ask you this, we never learned that, right? When this happened in the past, as it has - sanctions against individuals, the public never knows whether those individuals had some funds in the United States.


Is that correct?


Tim White: Never is probably too big of a word, but typically not, because obviously, the banks have privacy concerns that they can't disclose. Other elements are, of course, you know, that they have the right to have those accounts here until they're frozen. So, we don't know the impact or the success that these sanctions might actually have.


And it's just another card in the foreign policy deck.  


John Byrne: When critics say, hey, the administration didn't really do much. They don't know that for a fact. Right? 


Because what you just said, several institutions or who can't disclose are saying to themselves, oh no, this actually has an impact.




Tim White: Yeah. Having worked with many financial institutions, I know of numerous cases where a sanction has gone into place, and the general public does not know it. Still, it's like they just froze a million-dollar account and could sit on those for a long time. I think to say the Biden administration is being soft in this situation - I don't think that's the case at all.


I think that what's going to happen moving forward, trying to get internet access to Cuba, which the government has been blocking. This has been a part that the Obama administration kicked off back when they did their general licenses to say, let's work with commerce. To allow export and re-export of personal communication devices to the people of Cuba, and that is still in play.


And I think this will be another layer on top of that to try and get the individual, the people of Cuba, access to general media and the internet. 


And I think that goes a long way.


John Byrne: That makes sense. Tim White, thanks a lot for doing this. A quick plug, when we do these programs, they are on iTunes, so you can subscribe. So please do that.


I'm putting a podcast together in the next week, and I don't know when it will run on a de-risking study done by the Atlanta fed and a couple of academics. So, I think that'll be an interesting dialogue. So, thank you for joining us, and Tim talk to you later.