Since it was launched in July 2022, the 1 Cent 4 Cuba (1c4Cuba) campaign, co-founded by Rock around the Blockade (RATB), has organised people to send hundreds of international micro-transactions to challenge the extraterritorial application of the United States blockade of Cuba. We have evidence that British and European banks are systematically, and illegally, enforcing US sanctions on Cuba on their own customers with impunity. WILL JONES reports.
The imperialist blockade
The United States is the only country in the world to sanction Cuba or list it as a ‘state sponsor of terrorism’. However, because US sanctions prevent other countries from trading or dealing with Cuba, they constitute a blockade and a violation of international laws which protect the sovereignty of national jurisdictions. The US blockade was imposed as a punishment following Cuba’s overthrow of its US-backed capitalist dictatorship in 1959 and the building of a socialist state. To defend their own imperialist interests from the extraterritorial reach of US sanctions on Cuba (and Iran), Britain and the EU introduced blocking statutes in 1996. These were retained in British legislation following Britain’s exit from the EU. Under these laws, it is illegal for businesses and individuals operating in Britain or the EU to comply with US sanctions on Cuba. Fines can be levied on parties breaching the regulation, and damage caused by US secondary sanctions can be recovered from public funds. In cases where sanctions present a risk of serious damage to an individual, business, or to British/EU interests, exceptional authorisation to comply with US sanctions can be granted by the Secretary of State for International Trade/European Commission.
To date the blocking regulations have only been applied in the EU.Between August 2018 and March 2021, the European Commission received 63 notifications concerning the impact of US sanctions on EU operators, including 35 concerning Cuba. Blocking statutes were invoked in ten court cases by businesses that had contracts terminated or funds frozen due to fear of US sanctions on Cuba and Iran. In at least six cases, the courts ruled in favour of Iranian-connected businesses and ordered contracts to be restored or funds to be released. In 2019 a Dutch company, Exact BV, contracted a distribution company which then supplied its software to companies in Cuba; Exact then terminated the agreement after being acquired by a US investment company. A Dutch court ordered Exact to restore the contract, ruling that its shareholders must bear the risk of US sanctions entirely and noted that it may have breached the blocking statute.
An open secret
The EU is expected to reform the blocking statute to encourage more consistent enforcement and stronger deterrence. Yet its limited enforcement means businesses are more wary of receiving fines from the US Treasury’s Office of Foreign Asset Controls (OFAC) than from the British state or EU.
So despite the blocking statutes, banks operating in Britain and the EU blacklist transactions and accounts which they deem to involve Cuba or other US-sanctioned countries. This has been an open secret for many years: a Guardian article published 23 June 2008 reported that ‘although none of the major banks are prepared to go on record over their policy towards Cuba, The Guardian has learned that Lloyds TSB, Barclays Bank, the Royal Bank of Scotland and HSBC are all complying with the US blockade’. Carefully worded in their sanctions and financial crime policy documents, a number of British banks state that they restrict account activity that involves Cuba:
- HSBC: ‘Cuba and the Government of Cuba – relationships and transactions are prohibited to the extent that they involve a US nexus (that is, the US financial system, US persons or US-origin goods).’
- Lloyds: ‘certain restrictions and prohibitions apply when dealing with… Cuba.’
- Metro Bank: ‘is committed to… not conducting business directly or indirectly with or for the ultimate benefit of… Cuba.’
- Nationwide: ‘Restricting business activity, including the acceptance and remittance of certain payments, directly or indirectly… where there is a US nexus, [to] Cuba.’
- Wise: ‘We do not support… businesses with relations or activity directly or indirectly linked to Cuba’.
The 1c4Cuba campaign has seen that banks are implementing these sanctions bluntly, with disregard for UK regulations that protect commerce with Cuba. For fear of US retribution, the banks sometimes use extreme prejudice to insulate themselves from suspected Cuba-related activity.
There is systematic suppression of activities that flag up the word ‘Cuba’ by the bank accounts we have tested under a range of conditions: transactions for humanitarian purposes; involving a ‘US nexus’ or not; sent to Cuba, to various EU destinations or to Switzerland. Barclays, HSBC, Lloyds, Metro Bank, Nationwide, NatWest, Revolut, Santander, Wise and others subject payments that reference ‘Cuba’ to special scrutiny, and typically block the payments. Lloyds, Metro Bank and NatWest closed down bank accounts after such transactions were made – even the accounts of long-standing customers.
Metro Bank, established in 2010, is part-owned by US shareholders and is particularly Cuba-phobic. Two account holders were given notice their accounts would be closed immediately after sending payments from Britain to the EU referencing ‘Cuba’. A Metro branch manager boasted that the bank can close accounts associated with Cuba and has done so many times. For an International Day of Action for 1c4Cuba on 17 December 2022, participants set up over 20 accounts with Metro Bank and sent international transactions which referenced ‘Cuba’, typically to MediCuba-Europa, an NGO in Swizterland which raises funds for Cuba’s health sector. Metro Bank rejected all payments, warning each account holder ‘it must not be resubmitted under any circumstances. Metro Bank is unable to process this payment as it is considered outside of risk appetite for the Bank.’
A payment from a UK NatWest account to an EU country referencing ‘Cuba’ was delayed by security checks; following complaint, the bank said, ‘As these payments mention Cuba, [they] will undergo further checking and filtering if attempted again’. Subsequently, the bank backtracked and claimed that mentioning Cuba was not the cause of the delay, offering compensation. NatWest rejected a payment by a different customer to Cuba’s emergency fund following the Matanzas oil terminal fire in August; when challenged, the bank stated that ‘we have to abide with [sic] international laws…You can submit payments to Cuba, but…due to these sanctions it’s very unlikely we will be able to proceed with it’. Following complaint, the bank’s Customer Experience Team explained: ‘Cuba is a sanction [sic] country… US sanctions recognition is prescribed by FCA [Financial Conduct Authority] guidelines banks [sic] across the UK follow the same.’ The FCA denied it included any such prescription in its website or handbook. When challenged again, NatWest refused to provide a reference or to cooperate further; this supposed FCA policy is either covert or a fiction. In January 2023, the bank issued a notice that the personal account used would be closed down.
A Freedom of Information request submitted to the Department for International Trade in January 2023 received the response, ‘No bank or financial institution has requested an authorisation to comply with the sanctions on Cuba proscribed under the Extraterritorial US Legislation (Sanctions against Cuba, Iran and Libya) (Protection of Trading Interests) Order 1996, and no authorisation is still in effect.’
A grey area
Why has this policy continued unchallenged? The British state is not prepared to confront the United States over the issue, by enforcing blocking statutes, unless compelled to do so. Total trade in goods and services between Britain and Cuba was £41m in 2021-22. This is miniscule compared to Britain’s exports to the US of financial services alone, which totalled £61bn in 2021. For Britain, the EU and the US, the status quo, in which banks are permitted to maintain a semi-secret boycott of Cuba, is apparently preferable to confronting major financial institutions with secondary sanctions or blocking statutes. A deliberately murky and unaccountable bureaucracy ensures that challenging this status quo is not easy for individuals.
Banks have the right to review and block payments or close accounts at any time, without explaining why to customers. Banks’ payment and account review teams are not ‘customer-facing’ and are uncontactable. Records of their decisions are not even accessible to the banks’ own customer service and complaints teams.
If a customer decides to pursue a complaint anyway, they face long waits on the phone and weeks to get a final response. Bank agents deter complainants by referring to the weasel phrases contained in their terms and conditions; for example, citing ‘risk appetite’ to justify decisions to block payments, something usually associated with crime. This is nonsense: the most recent Financial Action Task Force mutual evaluation report found that Cuba is ‘not an attractive place for ML/TF [money laundering/terrorist financing]’. Banks will also offer piecemeal compensation for the inconvenience caused, without admitting fault. This is a cheap means to discourage the complainant escalating it into a costly (for them) investigation.
According to government guidance, the Financial Ombudsman Service (FOS) is tasked with investigating breaches of the blocking regulations. However, the FOS currently takes many months to pass a complaint to a case handler.
Time to force the issue
This secret blockade on Cuba must be exposed. It will only be broken by a collective challenge which applies precisely targeted pressure through coordinated work. The 1c4Cuba campaign exists for this purpose. The campaign creates a headache for the banks and proves the extraterritorial reach of the US blockade, which Cuba’s opponents often deny. It proves that humanitarian aid to Cuba is blocked, even in tiny amounts; and shows that Cuba has many international supporters. In addition, the campaign is making headway on concrete goals. In Britain, almost £1,000 has been won in compensation from the banks due to delayed or blocked payments and mishandling of complaints processes, far in excess of the value of the actual payments sent; these funds will contribute towards this campaign and our solidarity work with Cuba. Following the 17 December day of action and protests targeting Metro Bank branches across Britain, the bank appears to have settled for blocking payments but without closing more accounts; this change in behaviour shows that collective action can succeed where individuals are powerless. The profile of the campaign must be further increased by actions and publicity which cannot be ignored.
Join the 1c4Cuba campaign at www.1c4cuba.eu
Fight Racism! Fight Imperialism! No 292, February/March 2023
