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[WASHINGTON] US banks will be able to do more business in Cuba after the United States and the island nation agreed to restore diplomatic ties, but trade groups said their members will be slow to ramp up operations, fearing big penalties for mistakes.
Under a series of policy changes announced on Wednesday, US banks will find it easier to process money transfers to and from Cuban banks, and US travelers can use their home credit and debit cards in the island nation.
The US Treasury Department said it expects to ease its sanction rules for banking in Cuba in the coming weeks.
But figuring out how to implement those regulations may not be worthwhile for banks, because penalties for breaking sanctions rules can be severe, and Cuba's economy is relatively small, banking trade group officials said.
Rob Rowe, a lawyer with the American Bankers Association, said in an email that sanctions had been eased in the past without much change in banks' activities. "I know that when restrictions were lifted on Myanmar/Burma, many banks decided that the rules were so complex and the penalties...were so significant that it didn't make sense to go all out with business to that country," Rowe said.
Officials stopped short of saying banks would ignore Cuba.
JPMorgan Chase & Co said in a statement it was waiting for further details on how the rules would be implemented. Banks have been asking questions about how rules might work, said David Schwartz, chief executive of the Florida International Bankers Association.
But regulators have gone hard after banks for sanctions violations in recent years. BNP Paribas earlier this year agreed to pay nearly US$9 billion for breaking embargoes, including against Cuba.
Given the potential penalties, "a year from now, I wouldn't expect to see a lot of movement," said Schwartz.
US President Barack Obama said on Wednesday that he was re-establishing relations with Cuba because years of policies designed to isolate Cuba have failed to achieve change on the island.