Risk Indicators
- FATF/EU Blacklist/Greylist (Lower Concern)
- Terrorism Financing (Higher Concern)
- US Dept of State INCSR
- Proliferation Financing
- Corruption
- Criminality
- Resilience & Governance
- Financial Transparency
- Offshore Finance Centres
- Sanctions
Background
Cuba’s modern history was shaped by Spanish colonial rule, plantation slavery, and the independence struggle that culminated in the 1898 Treaty of Paris and the establishment of a republic in 1902. After decades of military- and politician-dominated governments, Fidel CASTRO’s 1959 victory created an authoritarian communist system supported by the Soviet Union and influential beyond the island. Miguel DIAZ-CANEL Bermudez, president since 2018 and First Secretary of the Communist Party since 2021, continues to lead that political structure.
Cuba attributes much of its socioeconomic hardship to the US embargo imposed in 1961, even though diplomatic relations briefly improved with the reopening of embassies in 2015. Relations remain tense, while the end of the “wet-foot, dry-foot” policy in 2017 altered longstanding patterns of Cuban migration to the United States. Regional pressures also include Haiti’s gang-driven humanitarian crisis and Jamaica’s organized crime and financial-compliance challenges, alongside sanctions and enforcement concerns involving the UN, European Union, and US authorities.
AML & Terrorist Financing
Cuba is not listed by FATF as having strategic AML deficiencies, and its 2024 evaluation found a mixed but generally improving compliance profile, with GAFILAT follow-up continuing after several recommendations were re-rated. The country’s centralized, largely state-owned financial system, BCC supervision, and the roles of DGIOF, MININT, and other agencies limit assessed ML/TF exposure, while the absence of reported TF cases and historically few ML prosecutions leave practical effectiveness less clear. Areas attracting scrutiny include opaque banking practices, limited STR activity from financial institutions and DNFBPs, incomplete coverage of domestic PEPs and certain sectors, NPO sanctions, and gaps affecting proliferation-financing freezing measures under UNSCR 1718 and 1737.
Sanctions
Cuba is required to support applicable United Nations sanctions, but no independent Cuban sanctions regime against other nations is identified, while state-linked entities such as GAESA and Cubametales are described as using intermediaries and maritime tactics to navigate restrictions involving Venezuela, Russia, and Iran. Against Cuba, the United States maintains the dominant framework through OFAC, including asset blocking, trade and travel limits, the Cuba Restricted List, export controls, and the State Sponsor of Terrorism designation. The 2025–2026 escalation—including NSPM-5 and Executive Order 14380—also increases pressure on third-country suppliers, while the EU, UK, Canada, Australia, Japan, and other jurisdictions generally oppose or resist the embargo’s extraterritorial effects rather than imposing their own Cuba sanctions.
Criminality
Cuba faces persistent criminal activity involving sex trafficking, forced labour, black-market trade in goods, illicit alcohol and tobacco, emerging drug markets, and financial crimes routed through state enterprises and remittance channels. Corruption is linked to weak supply chains, low official salaries, tax evasion, and the misuse of government positions—particularly in tourism and intelligence-related operations—while trafficking prosecutions remain uncommon and systemic graft continues within state enterprises.
Reports
Cuba’s strict policing, coastal surveillance by the Cuban Border Guard, and cooperation with the U.S. Coast Guard have kept illicit drug production, consumption, and trafficking relatively limited, although officials noted rising incidents and black-market access to certain prescription drugs. At the same time, Cuba remains classified as Tier 3 for trafficking concerns tied especially to labor-export programs managed through entities such as CSMC and UCSM, while its continued harboring of wanted individuals and ELN figures underpins its designation as a State Sponsor of Terrorism.
Industry/Product Sector Risk
Cuba’s industry landscape is largely state-controlled, with medium-risk exposure concentrated in retail banking, correspondent and trade finance, remittances, currency exchange, real estate, hospitality, construction, cash-intensive businesses, and transportation. Key vulnerabilities include corruption, embezzlement, trade-based fraud, cash placement, foreign investment, and trafficking-related proceeds, while centralized oversight, limited international integration, and the controls associated with the central bank and state entities reduce some risks. The roles of lawyers, notaries, accountants, the state postal company, and NPOs—including issues connected to Decree-Law 317 and developing supervisory frameworks—offer further insight into where Cuba’s AML/CFT environment is evolving.
Economy & Investment Climate
Cuba’s predominantly state-run economy is service-led, with tourism, skilled labor exports, pharmaceuticals, tobacco, nickel, and sugar complementing a large public sector while shortages, poverty, and environmental pressures persist. Constitutional reforms have expanded cooperatives and private enterprise and sought foreign investment in tourism and agriculture, yet bureaucratic constraints, the U.S. embargo, and the extensive economic role of the FAR-linked GAESA continue to shape the investment climate.
Cryptocurrency Regulations
Cuba permits cryptocurrency activity as regulated virtual-asset use rather than legal tender, with Central Bank of Cuba Resolution No. 215/2021 requiring VASPs to obtain renewable licenses and follow AML/CFT controls. The BCC’s Cryptoassets Group has assessed sector risk as “Medium Low,” while taxation, transaction tracking, token offerings, and protections surrounding ICOs remain areas where the framework is still taking shape.
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