Western Union closes in Cuba after Trump administration sanctions against remittances

FINCIMEX, the Cuban company that handles remittances from the US, announced that the operations of 407 WU offices throughout the island “will be totally interrupted.”

Western Union (WU), the main company for sending remittances to Cuba from the US, will close its operations on the island as a result of new sanctions from Washington against the government of Havana.

As FINCIMEX, the Cuban company that handles remittances from the US, announced on Tuesday, the operations of the 407 “payment points” of WU on the island “will be completely interrupted.”

“The responsibility for the interruption of the remittance service between the two countries falls on the US government ,” the statement said.

BBC Mundo contacted Western Union to find out its position on the Cuban announcement, but did not receive an immediate response.

Although official figures are unknown, research groups in Miami estimate that around a third of Cuba’s population receives money from abroad and that remittances are the island’s second source of income.

According to the consulting firm Havana Consulting Group , which tracks remittances to Cuba, an average of $ 3.7 billion is sent each year.

However, several studies conducted in the US suggest that remittances to the island have diversified and not only occur through Western Union or other money transfer agencies, but also through unofficial channels such as by “mules” or travelers who enter Cuba with cash.

The exit

The confirmation of the departure of WU from Cuba comes after the US reported last weekend that it would prohibit as of November 26 the sending of money through Cuban companies such as Fincimex and AIS, which the White House sanctioned for considering that they are controlled by the military.

“AIS is a financial institution controlled by the Cuban military that processes remittances sent to the Cuban people,” said US Secretary of State Mike Pompeo.

“The Cuban army also uses AIS, its parent company FINCIMEX, and other entities to collect fees and manipulate the remittance and foreign exchange market as part of the regime’s schemes to earn money and support its repressive apparatus,” he added in a statement.

Foreign companies that want to operate in Cuba must have a state counterpart and, in the case of Western Union, that partner has been Fincimex since 2016, a powerful company that also processes operations with Visa and Mastercard cards, as well as part of the payments. from Airbnb to Cuban hosts.

A third of the Cuban population receives remittances.

Thus, although part of the remittance shipments to Cuba from the US are made through Western Union, it is FINCIMEX that is in charge of processing the currencies.

“FINCIMEX, as part of the Cuban financial system, is the entity that by sovereign decision of the Cuban government has been in charge of guaranteeing remittances to Cuba from the US,” the entity’s statement indicates.

However, although remittances are sent in dollars, Cubans receive the transfer in “freely convertible currency” (MLC or CUC), one of the two that officially circulates on the island, which according to the US makes the currency hard to stay in the hands of the military.

FINCIMEX was incorporated as a “Cuban private company” in Panama in 1984, but has been accused by the US government of belonging to the Grupo de Administración Empresarial (GAESA), the Cuban company that controls tourism and other industries and companies. on the island.

GAESA is controlled by Raúl Castro’s ex-minister, General Luis Alberto Rodríguez López-Calleja, who was recently also sanctioned by the United States.

What did cuba say

In its statement, FINCIMEX questioned whether the US should take the measure in the midst of the coronavirus pandemic, which in its opinion “underscores the cynicism, contempt for the Cuban people and the opportunism of the US government.”

“The recent provisions directly attack family remittances even when Washington spokesmen lie and try to make it appear that the limitations are only for a specific entity,” the statement said.

According to the company, the new provisions of Washington also prevent “the negotiations that, at the request of FINCIMEX, had been taking place for months to launch the remittance service to bank accounts in MLC.”

As reported by The Miami Herald newspaper , after the State Department included AIS on its list of restricted entities at the end of September, the Miami-based agencies that sent remittances in dollars to Cuba resumed the service through two banks. Cuban governments.

What does the US say?

According to the new provisions of the Treasury Department published in the Federal Register this Tuesday, the authorization for remittances to the island will exclude “any transaction that involves entities or sub-entities identified in the Restricted List of Cuba.”

The regulations indicate that US citizens and companies will be prohibited from conducting financial transactions with these companies from the next 30 days.

The new sanctions are part of another group of measures that the Trump administration has taken in recent months to limit the sending of remittances to the island, ranging from limiting the amount of remittances to the inclusion of Cuban financial companies on the list. black from the Treasury Department.

According to Washington, the measures seek to prevent US dollars from going into the hands of the Cuban military and from “the funds flowing to the Cuban security and intelligence agencies,” which the US accuses of being behind human rights violations. both on the island and in Venezuela.

The measure was announced just over a week before the US elections for which Trump has sought to win the support of the Cuban community settled in places like Florida, where some of its members support the imposition of strong sanctions against La Havana.

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