Venezuela taps small banks to handle dollar deals
Venezuela's government is using little-known banks, including a small Puerto Rican lender, as intermediaries for some international trade operations after Citigroup last year stopped providing such services.
The government has turned to relatively unknown institutions to provide a service known as correspondent banking, as international banks are increasingly concerned about the risks of doing business with socialist-ruled Venezuela amid investigations into corruption and drug trafficking.
It also coincides with complaints by President Nicolas Maduro that Venezuela is struggling to obtain financial services amid a severe economic crisis characterized by triple-digit inflation and chronic shortages.
The country's relationship with global banks is also complicated by a 14-year-old currency control system that requires businesses to acquire dollars through the government rather than private banks.
Correspondent banks provide an essential service that allows countries to import goods and maintain links to the global financial system. Italbank, the Puerto Rican lender owned by Venezuelan entrepreneur Carlos Dorado, has served as one for Venezuela since 2016, through which about 10 or 15 percent of the dollars are transferred, according to the owner.