Cuba -- AML/CFT Compliance Regulatory Overview

Cuba has been progressively developing its regulatory framework for virtual assets (VAs) and virtual asset service providers (VASPs), primarily driven by the need to comply with international standards set by the Financial Action Task Force (FATF) and to manage the economic implications of cryptocurrencies.

The regulatory environment is relatively new and still evolving, but key pieces of legislation and regulatory bodies have been established.

AML/CFT Legislation and Regulatory Framework

Cuba's AML/CFT framework for virtual assets is primarily based on a combination of general anti-money laundering laws and specific resolutions issued by the Banco Central de Cuba (BCC).

1. Ley No. 143/2021 (Law 143/2021) – Ley de Prevención y Confrontación del Lavado de Activos, el Financiamiento al Terrorismo y a la Proliferación de Armas de Destrucción Masiva

   • Name: Law for the Prevention and Confrontation of Money Laundering, Financing of Terrorism, and the Proliferation of Weapons of Mass Destruction.
   • Overview: This is the foundational and comprehensive AML/CFT law in Cuba. It establishes the general obligations for all financial institutions and designated non-financial businesses and professions (DNFBPs), including VASP-like entities, to implement measures to prevent and detect money laundering and terrorist financing. It aligns with FATF Recommendations.
   • Source: Published in the Gaceta Oficial de la República de Cuba.
   • URL (Gaceta Oficial): https://www.gacetaoficial.gob.cu/ (You would search for "Ley 143/2021" on this site).

2. Resolución No. 215/2021 del Banco Central de Cuba (BCC)

   • Name: Resolution 215/2021 of the Central Bank of Cuba.
   • Overview: This is the cornerstone regulation specifically for virtual assets. It establishes the rules for the use of certain virtual assets in commercial transactions, their licensing, and supervision in Cuba. It defines virtual assets and virtual asset service providers (VASPs). It explicitly states that the BCC will grant licenses to VASPs that operate in Cuba. It also emphasizes that operations with virtual assets must comply with AML/CFT rules.
   • Key Provisions:
     • Legalizes the use of virtual assets for financial transactions between individuals and legal entities, but only those authorized by the BCC.
     • Requires service providers dealing with virtual assets to obtain a license from the BCC.
     • Prohibits the use of virtual assets that are not authorized by the BCC.
     • Stresses compliance with AML/CFT regulations.
   • Source: Published in the Gaceta Oficial de la República de Cuba.
   • URL (Banco Central de Cuba): https://www.bc.gob.cu/ (Look for the resolution in their legal norms section).

3. Resolución No. 216/2021 del Banco Central de Cuba (BCC)

   • Name: Resolution 216/2021 of the Central Bank of Cuba.
   • Overview: This resolution complements Resolution 215/2021 by detailing the licensing process for virtual asset service providers (VASPs). It specifies the requirements, procedures, and conditions that legal entities must meet to obtain a license to operate with virtual assets in Cuba.
   • Source: Published in the Gaceta Oficial de la República de Cuba.
   • URL (Banco Central de Cuba): https://www.bc.gob.cu/ (Look for the resolution in their legal norms section).

Customer Due Diligence (CDD) Requirements

While Resolutions 215 and 216/2021 lay the groundwork for VASP licensing and operations, the specific CDD requirements are primarily derived from the broader Law 143/2021 and the international FATF standards it incorporates. VASPs operating in Cuba would be expected to apply these to their customers.

1. Identification and Verification:
   • Obtain and verify the identity of the customer and, where applicable, the beneficial owner. This includes:
     • For Individuals: Full legal name, date of birth, address, nationality, national identity number (e.g., ID card, passport), and occupation. Verification must be from reliable, independent sources (e.g., official documents).
     • For Legal Entities: Legal name, legal form, address of the registered office, names of directors/senior management, beneficial owners, and proof of existence (e.g., articles of incorporation, business registration certificate).
2. Purpose and Nature of the Business Relationship: Understand the purpose and intended nature of the business relationship or transaction.
3. Ongoing Monitoring: Conduct ongoing monitoring of the business relationship and transactions undertaken by customers to ensure consistency with the VASP's knowledge of the customer, their business, and risk profile, including the source of funds.
4. Risk-Based Approach (RBA): Implement a risk-based approach, meaning that the intensity of CDD measures should be commensurate with the level of ML/TF risk identified.
   • Simplified Due Diligence (SDD): May be applied in low-risk situations.
   • Enhanced Due Diligence (EDD): Must be applied for higher-risk categories, such as:
     • Politically Exposed Persons (PEPs).
     • Customers from high-risk geographic areas (as identified by FATF or national authorities).
     • Complex, unusual, or large transactions.
     • Customers whose beneficial owners are not clearly identified.
     • Cross-border correspondent relationships (if applicable to VASP activities).

Suspicious Transaction Reporting (STR)

VASPs are considered obliged entities under Law 143/2021 and are therefore required to report suspicious activities.

1. Obligation to Report: VASPs must establish systems to detect and report any transaction or activity that they suspect to be related to money laundering, terrorist financing, or proliferation financing.
2. Reporting Body: The reports are made to the Unidad de Inteligencia Financiera (UIF), which is Cuba's Financial Intelligence Unit. The UIF operates under the Fiscalía General de la República de Cuba (Attorney General's Office of the Republic of Cuba).
3. Content of Report: STRs typically include:
   • Details of the customer(s) involved.
   • Description of the suspicious transaction(s) or activity.
   • Amounts and dates of transactions.
   • The reasons for suspicion.
   • Any supporting documentation.
4. No Tipping-Off: VASPs and their employees are prohibited from disclosing to the customer or any third party that a STR has been filed or that an investigation is underway.

Record-Keeping Obligations

In line with Law 143/2021 and international standards, VASPs are required to maintain specific records.

1. CDD Information: All records obtained during the CDD process (identification documents, verification documents, beneficial ownership information).
2. Transaction Data: Records of all transactions, including amounts, dates, types of assets, sender and recipient information, and any relevant messages.
3. STRs: Copies of all suspicious transaction reports filed, along with any supporting documentation and internal analysis.
4. Internal Policies and Procedures: Records related to their AML/CFT policies, procedures, risk assessments, and training programs.
5. Retention Period: Records must generally be maintained for a minimum period (typically 5 years) after the business relationship ends or after the date of the transaction. This duration would be specified in the implementing regulations of Law 143/2021.

Authority Overseeing Compliance

Two primary authorities oversee AML/CFT compliance for VASPs in Cuba:

1. Banco Central de Cuba (BCC)

   • Role: The BCC is the primary regulator and licensing authority for virtual asset service providers. It is responsible for:
     • Granting licenses to VASPs to operate in Cuba (per Resolution 215/2021 and 216/2021).
     • Supervising the operational compliance of licensed VASPs.
     • Issuing further regulations and guidelines related to virtual assets.
   • URL: https://www.bc.gob.cu/

2. Unidad de Inteligencia Financiera (UIF) / Financial Intelligence Unit (FIU)

   • Role: The UIF, under the Fiscalía General de la República de Cuba, is responsible for:
     • Receiving, analyzing, and disseminating suspicious transaction reports (STRs) from obliged entities, including VASPs.
     • Collaborating with other national and international authorities in the fight against ML/TF.
   • URL (Fiscalía General de la República): https://www.fgr.gob.cu/ (The UIF's specific portal might not be publicly listed, but it operates under the Attorney General's Office).

Important Considerations

• U.S. Sanctions (OFAC): It is crucial to note that Cuba remains under extensive U.S. sanctions (administered by the Office of Foreign Assets Control - OFAC). Any international VASP considering operating in or with Cuba must carefully assess these sanctions, as engaging in transactions involving Cuba could lead to severe penalties from U.S. authorities, regardless of Cuban domestic regulations.
• Evolving Landscape: The regulatory landscape for virtual assets is still developing globally, and Cuba's framework is relatively nascent. VASPs should be prepared for potential updates or additional guidance.
• Practical Implementation: While the laws and resolutions establish the framework, the practical implementation and enforcement details may continue to evolve.