The Central Bank of Cuba announced that the interruption of the credit companies’ activities was linked to the suspension of foreign bank services that processed these transactions. The bank stressed this was a consequence of the expanded sanctions regime on Cuba.
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Key Takeaways:
- Trump issued EO 14404 on May 1, forcing a bank to cut ties with Fincimex and next halt Cuba transactions.
- Halting Visa and Mastercard hits Cuba’s tourism market, next blocking 100% of income from Western cards.
- Effective June 6, tourists must next rely on Mir Cards or UnionPay as OFAC broadens trade sanctions.
Mastercard And Visa Stop Processing Payments In Cuba
Mastercard and Visa, two of the world’s largest credit companies, will no longer offer payment processing services in Cuba.
The Central Bank of Cuba announced on Wednesday that it had received a communication from an undisclosed foreign bank that processed these transactions in Cuba, stating that it would halt its commercial relationship with Fincimex, a payment intermediary.
The central bank stressed that this action “is directly related to Executive Order No. 14404 of May 1, issued by the President of the United States of America, Donald Trump, as part of his strategy of strangulation against the people of Cuba.”
Executive Order 14404 expanded the previous sanctions regime against the nation, as the Office of Foreign Assets Control (OFAC) explains that it “broadens U.S. sanctions on Cuba to include authorizing sanctions on non-Cuban foreign persons for providing support to Cuba and on foreign financial institutions for conducting or facilitating significant transactions involving persons blocked.”
This means that Cuba cannot receive income from the sale of goods and services transacted using international cards operated by Visa and Mastercard.
“The foreign bank announced that, effective June 6—the date on which the measure imposed by the empire enters into force—it becomes unlawful and impossible to continue executing the agreements with the Cuban entity,” the central bank concluded.
In 2020, the OFAC identified Fincimex, a Panama-based company that handles remittances and foreign operations for the central bank, as an entity controlled by the Cuban military with strategic roles in the Cuban economy. The entity would operate as a subsidiary of Grupo de Administración Empresarial S.A. (GAESA), an umbrella enterprise established by the Cuban regime to bypass Cuban Assets Control Regulations (CACR) sanctions.
The measure would primarily affect tourists, who would have to rely on other payment methods while staying on the island. Other payment methods, including national prepaid cards, Mir Cards and UnionPay cards, will operate normally.
Visa and MasterCard were recently invited to leave Russia, as Alla Bakina, Director of the Bank of Russia’s National Payment System Department, stated that “they no longer carry out or provide the functionality they always ensured” due to similar sanctions.
