Banks action on Cuban sanctions hits UK companies

By Roland Gribben for the Telegraph
21 October 2010

Lloyds TSB has blocked a bank transfer from Cuba to a UK business that supplies agricultural consultancy services despite the free flow of trade between the Caribbean country and the EU

A small business consultancy has tabled complaints to the Business Secretary and EU authorities accusing Lloyds TSB of breaking the law by refusing to process a cash payment from a Cuban business for £7,156.

Barrie Bain, chairman of Tunbridge Wells-based Fertecon, said yesterday: "I find it astounding that a bank controlled by the state is doing something that is against the law. It is damaging our business and presumably the export efforts of thousands of other small UK companies."

Lloyds has told him the bank has reviewed its approach to dealing with countries subject to government and international sanctions "in order to best protect its customers, its businesses, its people and its reputation."

Keiron Walsh, a senior manager in the bank's commercial department, told Mr Bain: "Unfortunately we are unable to offer you advice on alternative arrangements for your payments."

The block on the bank transfer has thrown into fresh focus changes quietly introduced by banks to avoid falling foul of US regulations over the breach of its trade sanctions against Cuba.

Neither the UK nor the EU has similar blocks on trade with Cuba but the importance of the US market has seen UK banks fall into line.

Lloyds has already felt the full weight of the US regulatory authorities, being forced to pay $350m in January last year after being accused of helping clients in Iran, Libya and Sudan to avoid US sanctions. The sanctions power exercised by the US was also on display when Barclays was fined in August for allegedly breaking US sanctions through business dealings with people linked to Cuba, Iran, Libya, Myanmar and Sudan. The British bank agreed to pay a $298m fine covering business transactions worth $500m.

The upshot is that Barclays has told customers it no longer handles any business with links with Iran, North Korea, Myanmar or the sanctioned areas of Sudan. "Our sanctions policy also includes a prohibition on transactions involving anyone or any entity on the US, UN [United Nations], UK or EU sanctions list," the bank said.

Lloyds defended its action over the Cuban payment. "Lloyds takes its responsibility with regard to the application of sanctions very seriously and recently reviewed our approach to dealing with countries and entities that are subject to government and international sanctions across the globe in order to best protect our customers, our businesses, our people and our reputation."

Mr Bain, who specialises in providing advice on agricultural markets, particularly fertilisers, and has 95pc of his business overseas has undergone a crash course in trade restrictions since the cheque was blocked a week ago and said his research showed that under the Protection of Trade Interests Act and the EU Blocking Statute "it is illegal to block payments from Cuba".

He has been told by Vince Cable's Business Department that no order has been made under the terms of the Trade Interests Act making it an offence to comply with another country's extra territorial legislation – regulations designed to counter the US restrictions under the terms of the Helms-Burton act in 1996.

But Mr Bain has discovered there is scope for the department to consider an investigation if a complaint is tabled about a bank's refusal to handle a transaction with Cuba.

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