In Cuba, you can change money in state-operated exchange houses called CADECAs. These locations are usually clearly indicated on street signs and can be found in all cities and towns and at most airports and hotels. The CADECAs located in cities usually offer better foreign exchange rates than those at hotels and airports. It is advisable to exchange just a bit of money at the airport, upon entering the country. This will give you some purchasing power until you can locate a CADECA offering better rates. A map of all the CADECA foreign exchange offices in Havana and Cuba can be found here: Official Cuba CADECA Map
CADECA offices will exchange all types of foreign currency. The most common currencies exchanged are Euros, British Pounds and Canadian and American dollars. You cannot convert all currencies in Cuba. For example, Australian dollars are not accepted. To exchange some currencies, you might have to visit a main CADECA office rather than a satellite branch.
A full list of all the currencies which are accepted for conversion as well as their daily conversion rates can be seen at http://www.banco-metropolitano.com.cu/canje-monedas/
Foreign currencies are all converted first to Cuban Convertible Pesos (CUC). If you want Moneda Nacional, you can convert your CUC currency to MN on a 1:24 basis, as part of a separate transaction.
Contrary to some beliefs, tellers at CADECA offices are usually very honest when exchanging foreign currency. Scams at these locations are extremely rare. In order to exchange foreign currency you will be asked to provide a piece of ID, usually a passport, and your information will be entered into a computer. The clerk will count out your money, confirming the amount with you, and then give you a printed slip indicating how much Cuban currency you will receive back. The clerk will then count out the Cuban currency two times before passing it to you. You are free to take your time to recount the currency. Generally, clerks will refuse all tips so as to remain completely impartial in the transaction.
Note: It is best to convert your foreign currency to Cuban currency at several intervals throughout your trip rather than converting everything at once. If you find yourself with a lot of Cuban currency at the end of your trip and want to convert it back to your original foreign money there will be substantial foreign exchange charges. This might easily reduce the value of your currency by 5%. Furthermore, taking a large amount of Cuban currency out of the country is not permitted. A few dollars is fine, but if Cuban customs finds that you have many hundreds of dollars in CUC as you exit the country, it can be confiscated.
Another way to exchange foreign currency is to use a bank. There are several large bank brands operating in Cuba, and all are capable of exchanging foreign currency. Although banks might, on occasion, offer slightly better exchange rates than CADECAs, it should be noted that the lineups to get into a bank are often very long. In addition, while a bank can exchange your foreign currency into CUC, some banks are not permitted to exchange CUC into MN. The only place to do this is at a CADECA.
One of the cheapest ways to convert currency is to exchange it privately with other foreigners. This strategy works best for the most popular currencies like Canadian dollars, Euros, and American dollars. The best location to meet foreigners looking to exchange currency is at an airport CADECA. You will usually encounter many foreigners who have just completed their trip in Cuba and are eager to sell their leftover CUC. Since CADECAs usually charge an exchange fee of at least 5%, you can offer a slightly lower rate and buy these CUC directly from the foreigners. You will both benefit by saving the standard exchange fees.