TAMPA — Those in favor of normalized relations with Cuba have held out hope that a bank in Florida — the state with the largest Cuban-American population in the U.S. — would agree to service the island nation’s bank accounts when others won’t.
Continued regular air travel between the U.S. and Cuba may hang in the balance.
But a bill advancing through the state Legislature may dash those hopes in what may be a case of unintended consequences.
House Bill 673, sponsored by Milton Republican Rep. Doug Broxson, includes a number of changes in financial regulations, one of which would require Florida banks doing business with those suspected of supporting terrorism to file the same reports with the state as they already are required to do on a federal level.
Under the federal law, this includes nations designated as sponsors of terrorism: Cuba, Iran, Syria and Sudan.
“Banks were afraid of doing business with Cuba before this bill was proposed because of the federal regulations and fines,” said Bill Hauf, president of Island Travel & Tours, whose flights serve Tampa and Havana. “Now that the state is also involved, adding another level of bureaucracy and oversight, there is no way a state bank will want to be involved.”
Because of the strict reporting requirements and the threat of fines for failing to follow them meticulously, it appears no one wants to be Cuba’s banker in the United States.
The requirements were imposed after the 9/11 terrorist attacks in order to help keep terrorist money from entering the U.S. through financial institutions.
Cuba’s former banker, Buffalo-based M&T Bank, has ceased depositing checks for the Cuban Interests Section in Washington, D.C., and on March 1 will cut all ties with Cuba.
Until a new U.S. bank agrees to handle Cuba’s account, the Interests Section has stopped all services that require financial transactions, including the issuing of visas needed to travel to Cuba.
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“Even if you’re not afraid of the fines, the regulatory burden is so large that it is just not worth it,” said Gary Bagliebter, a partner with the Fort Lauderdale law firm Shutts & Bowen and a certified anti-money laundering specialist. “Banking is a business, and I cannot believe that the Cuban Interests Section’s account is worth that hassle.”
Unless the banking issue is resolved and the Interests Section resumes all services, “there will be a slowdown and ultimately complete ceasing of people from the United States traveling to Cuba,” said travel agent Hauf.
That will happen, he said, when preapproved visas run out and Cuban passports carried by Cuban-Americans expire.
Tampa International Airport accounted for 44,711 of the half-million people traveling between the U.S. and Cuba in 2012. Airport officials project that number rose in 2013 to 51,594. Since flights to Cuba were launched in 2011, airport officials estimate it has generated more than $1.4 million in revenue.
Florida Rep. Kathy Castor, the Tampa Democrat, favors normalized relations with Cuba and has said she was actively searching for a bank in Florida. She has called the federal regulations and fines a roadblock.
Castor could not be reached for comment this week on the proposed state legislation.
Sponsor Broxson said his bill was not written with Cuba in mind. The country never came up in the process of drafting of the bill, he said.
“There is absolutely no intent to identify any groups or any specific deposits,” he said.
Rather, he said, the goal is simply to align Florida’s regulations with those on the federal level.
Attorney Bagliebter said that is part of a national trend.
“It may have to do with the shifting sands of time,” he said. “People believe they need to be on board with ... current laws and regulations.”
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Broxson said the move would help state investigators. Financial crime experts not involved in the Cuban debate agreed.
“It means that if passed, Florida will be working cooperatively with the federal government to ensure that both state and federal laws with respect to money laundering and terrorist financing are vigorously enforced,” Bagliebter said. “The hand in glove theory does make investigations easier.”
That view is echoed by Robert Mazur, a former agent of the Drug Enforcement Administration who helped bring down a major international financial institution that had laundered tens of millions of dollars for Pablo Escobar, the notorious Colombian drug dealer.
For instance, the process of obtaining the reports financial institutions file with the federal government can slow an investigation for state agents. Having those same reports filed at the state level speeds the process and increases the chance investigators will flag potential terrorist funding, Mazur said.
“Reaction time to these filings could be important too, which is another reason to establish parallel state/federal forms, statutes, etc.,” Mazur wrote in an email.
The House bill has passed its first subcommittee. A companion bill introduced by Lehigh Acres Republican Garrett Richter, Senate Bill 1012, has not been heard.
The bill also deals with injunctions, trade secrets and the practice of financial institutions using names to mislead consumers.
At least one observer said he believes the bill was written to hurt Cuba’s chances of finding a bank in the United States.
Patrick Manteiga, publisher of Tampa’s weekly La Gaceta newspaper and a longtime advocate of expanded Cuba relations, said: “Every time I have looked at one of these bills in the past 10 years, there is always someone in the Cuban exile community who asked for someone involved in writing the bill to slip in something that could hurt Cuba under the radar.
“I would look to Miami’s Cuban-American delegation to be the reason this anti-Cuba language was added in.”
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Similar language restricting Floridians’ dealings with any “terrorist state” appears in legislation passed in 2006 prohibiting money that flows through a state university — including grants from private foundations — from being used for travel to a state sponsor of terrorism.
Backers of that law said they did have Cuba in mind, though this legislation didn’t name Cuba, either. They view any travel to Cuba as potential support for the ruling Castro regime.
University researchers here, including marine biologists, say they are being left behind in crucial research because Florida is the only state with the travel spending ban.
Hauf remains optimistic that travel to Cuba will not be interrupted for the long term.
One option if Cuba doesn’t secure a bank is for U.S. travel agencies to send Cuba a list of passengers and the necessary fees so visas could be issued once they arrive on the island.
“It would be a huge burden on Cuba if funds from U.S. tourists ceased coming into the country,” Hauf said. “So I am optimistic that because there is a great need in Cuba for the funds, they will come up with a mechanism to continue travel.”
Still, he would prefer seeing Cuba taken off the terrorist list to make banking easier.
“This is just another indication of why it needs to be done,” he said.
The U.S. placed Cuba on the terrorism sponsor list in 1982, in part for its support of the Revolutionary Armed Forces of Colombia, known by its Spanish acronym FARC.
A Communist militia linked to the Colombian drug trade, FARC has been at war with the government since the 1960s.
Cuba remains on the list even though a 2013 State Department report says Cuba is hoping broker an agreement between FARC and the Colombian government.
“We are wasting our time on a country that is not a threat to anybody,” Hauf said. “It’s ridiculous.”