DeFi protocol frontend in Cuba

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

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

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

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.

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.

Stresses compliance with AML/CFT regulations.

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).

Purpose and Nature of the Business Relationship: Understand the purpose and intended nature of the business relationship or transaction.

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.

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:

Lack of Transparency: The Cuban government is not known for its transparency regarding internal enforcement actions, especially against individuals or smaller, private entities.

Focus on Regulation: Cuba's primary public actions concerning crypto have been the creation of a legal framework to regulate virtual assets, aiming to harness them for economic benefit (e.g., bypassing US sanctions, facilitating remittances) while simultaneously controlling their use to prevent illicit activities and maintain state oversight.

Nature of the Economy: In a state-controlled economy, significant independent financial operations (like an unregistered crypto exchange) would likely be shut down or absorbed without a public trial or detailed announcement.

Central Bank of Cuba (BCC) holds expanded enforcement powers, including unilateral authority to freeze bank accounts without notice and suspend Visa and Mastercard transactions.

Resolution 215/2021 regulates the use of virtual assets in Cuba. It defines virtual assets and states that their use for transactions between natural and legal persons is authorized by the BCC, provided they are issued by central banks or monetary authorities, or otherwise explicitly approved by the BCC. It also explicitly prohibits the use of virtual assets issued by private entities without prior authorization from the BCC. Entities operating with virtual assets must obtain a license from the BCC.

Resolution 216/2021 initially authorized financial institutions to use virtual assets under BCC supervision with prior authorization, but subsequent implementation has moved to a concrete licensed framework where only 10 state-owned and mixed-enterprise firms have been granted licenses, excluding regular banks and non-bank financial institutions, and accompanied by new restrictive conditions including unilateral account freezing powers.