Posted by Clif Burns at 8:26 pm on October 25, 2010.It started simply enough. A small, U.K.-based agricultural consultant, Fertecon,took a check for 7,156 to its banker, Lloyds, and asked them to cash it. Lloyds refused. The reason? The check came from Cuba.">Posted by Clif Burns at 8:26 pm on October 25, 2010.It started simply enough. A small, U.K.-based agricultural consultant, Fertecon,took a check for 7,156 to its banker, Lloyds, and asked them to cash it. Lloyds refused. The reason? The check came from Cuba.">

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Small British Company Takes On Lloyds for Not Cashing Cuban Check

Posted by Clif Burns at 8:26 pm on October 25, 2010.It started simply enough. A small, U.K.-based agricultural consultant, Fertecon,took a check for 7,156 to its banker, Lloyds, and asked them to cash it. Lloyds refused. The reason? The check came from Cuba.

Once bitten, twice shy, it would seem. Last year, Lloyds agreed to pay $217 million in penalties and to adopt certain compliance procedures arising from allegations by the U.S. Treasury Department's allegations that Lloyd deleted information about Libya, Sudan and Iran in wire transfer instructions in order to clear dollar transactions through its correspondent banks in the U.S. Specifically, Lloyds agreed to third party audits "to determine whether any payments subject to OFAC regulations were processed through, or on behalf of, any U.S. individual or entity."

Twice shy here means that Lloyds is backing away from transactions that it would appear aren't even subject to OFAC's regulatory jurisdiction and which don't involve transactions to be processed through a U.S. bank or on behalf of any U.S. entity. It was a check payable to a U.K. company in pounds sterling. So maybe its thrice shy or twenty times shy.

The problem here, of course, is E.U. Council Regulation No. 2271/96 which makes it illegal for Lloyds to cooperate with the U.S. sanctions on Cuba. This point was not lost on Fertecon, or its lawyers, who have traipsed off to U.K. and E.U. authorities to complain. Lloyds case with the E.U. is not terribly enhanced by the fact that U.S. law wouldn't appear to prohibit Lloyds from negotiating a Cuban check in pounds sterling for a U.K. customer.

Lloyds must have made a careful calculation, given the lack of any significant enforcement of Regulation 2271/96, that it would be happy to be bitten by a toothless, mangy dog in its own backyard if it would curry favor with a neighbor's angry pit bull that thinks it owns the entire neighborhood.

http://www.exportlawblog.com/archives/2485

Source: http://groups.yahoo.com/group/CubaNews/message/118667

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