After a two-year halt, Western Union has quietly resumed money remittances to Cuba through a pilot program with the hope of expanding its operations in the future, the company says, a much-anticipated step that provides Cuban American families with a more reliable way to help their families on the island.
“It is with great pleasure we announce the resumption of our Cuba operations with an initial testing phase of outbound service from the U.S. to customers with Cuban bank accounts via select U.S. Agent locations,” said Gabriella Fitzgerald, the president of Western Union’s North America division.
“The close connection between our U.S. customers and their families living in Cuba together with the role our services play in helping create better lives, are inextricably linked,” she said. “We are delighted to offer this critical connection once again for our customers.”
Before Western Union suspended operations in 2020, experts estimated that remittances were the country’s second-largest source of revenue and that the company held a large chunk of that market. The money sent by Cubans in the U.S. and Cuban Americans is a lifeline to many families on the island, which is going through the worst economic crisis since the Soviet Union collapsed.
According to a company statement, the service is only available in a few locations in Miami, including “select Florida Check Cashing, Navarro, Sedanos, La Fama Supermarkets, Exito Supermarkets, Mundo Communicatel, Price Choice Foodmarket, and J&R Century locations.” Sending money through the company’s website or the app, a popular option, is still not available at this time, the company said without saying when they could restart.
Customers going to those Miami locations can send up to $2,000 in a single transaction to Cubans with debit cards or accounts at the Banco Popular de Ahorro, Banco Metropolitano S.A. and Banco de Crédito y Comercio. The person in Cuba receiving the money must provide a government-issued I.D. The funds, which could be available the same day if sent before noon, will be deposited in U.S. dollars.
The company said the transfer fees vary according to the amount sent and if the customer uses a retail location or, in the future, a digital platform. For example, the cost of sending $100 is $8 and the fee to send $1,000 is $26.
The announcement ends a long wait for formal remittance channels to resume. Cubans in South Florida and Cuban Americans didn’t stop sending money to their families and friends. Still, they had to find informal, more expensive ways to do so, usually through travel agencies or travelers carrying the cash, popularly known as “mulas.” Some apps also offered money transfers, but the service didn’t take off because of all the different steps and hurdles users have to go through.
John Kavulich, the president of the U.S.-Cuba Trade and Economic Council, said Western Union’s pilot program is still “a long way from back to normal.” He said the company is trying to work out all the details of transactions with the Cuban banks before restoring online services. The company, he says, is interested in “playing a substantial role” in supporting the development of recently authorized small and medium private businesses.
Kavulich believes the restart of Western Union money transfers deposited in dollars will further pressure Cuban authorities to ease some of the restrictions they have imposed on the U.S. currency. Currently, the Cuban government limits the amount of dollars sold to the population and private enterprises. Cubans also cannot use the dollars to purchase products in government stores. Instead, they have to deposit the dollars in a Cuban bank account, but the money is exchanged for MLC, a Cuban hard currency. Then they can use the cards linked to those accounts to buy groceries and other basic staples at the stores.
The U.S. embargo generally prohibits financial transactions involving Cuba, but it includes several exceptions, including remittances. Last year, the Biden administration lifted the limits on the amount of money people living in the United States could send to Cubans, which the Trump administration had imposed.
Western Union suspended operations in November 2020 after the Trump administration sanctioned two financial entities, Fincimex and Ais, two entities processing remittances, for their links with GAESA, the conglomerate of companies run by the Cuban Armed Forces. Since then, the Cuban government had refused to transfer the remittance business to a non-military company, despite assurances by the Biden administration that such a step would have solved the issue. At the same time ,and ever since Western Union closed its more than 400 locations in Cuba, the Cuban government has used the case to highlight the impact of U.S. sanctions on Cuban families.
It is unclear what finally made the island’s authorities budge, but in recent meetings of the National Assembly and the Communist Party, officials provided figures showing the catastrophic state of the Cuban economy.
Previously, the U.S. Treasury Department issued a license to VaCuba, a Miami travel agency, to process remittances to Cuba through Orbit S.A., a financial institution the Cuban government created last February. According to Orbit’s Facebook page, the company is also processing remittances sent through Cubamax, another Miami-based travel agency.
A source with knowledge of the issue who was not authorized to publicly disclosed details of the deal said the Cuban government had provided documentation to the Biden administration claiming that Orbit S.A. is not linked to GAESA, which is under U.S. sanctions. Proyecto Inventario, an independent Cuba news outlet, reported that Orbit’s office in Miramar, Havana, is next to a Fincimex office and that former Fincimex staff now works for Orbit.