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The Western Union company is considering delivering remittances sent to people in Cuba in United States dollars (USD), which would at the same time allow direct deposits in magnetic cards enabled for the new foreign currency stores in the country.
Western Union's decision would mark a change in the delivery of cash remittances to residents of the island, which are currently made in convertible pesos (CUC).
"Indeed, Western Union has been offered that possibility, and we are still evaluating the viability of providing remittances in USD from a regulatory and operational perspective," he told CyberCuba Margaret D. Fogarty, spokesperson for the corporation for the Americas area.
The proposal to deliver remittances in dollars and transfer them to magnetic cards came from the Central Bank of Cuba (BCC). The official added that while a decision is made, Western Union's businesses and services with Cuba will continue to operate as always.
Forgaty declined to set a date for the possible implementation of the measure under study. "If any changes arise, we will communicate directly with affected customers and stakeholders," he said.
The alternative of changing the payment of remittances from CUC to dollars arose at the proposal of the Cuban government, after the announcement of the opening of 77 stores selling household appliances, motorcycles and car parts throughout the national territory, last October. The urgent purpose of the government measure is to collect hard currency, trying to mitigate the effects of the intensification of trade and financial sanctions by the Donald Trump administration.
Western Union said the decision depends on making the necessary technological adjustments.
The operation of the collection stores has begun to devalue the CUC in the Cuban economic panorama, aggravated by the existence of a monetary duality. Although the CUC remains in use, numerous businesses and private services prefer payment in dollars or Cuban pesos given the uncertain future of the CUC.
In October, the leading global payment and remittance services company, announced that it was in the process of updating its operating systems to comply with the restrictions implemented by the Trump government on remittances and money transfers to the island. Since last October 9, the Treasury Department limited the sending of family remittances to $1,000 per quarter and eliminated those categorized as donations to Cuban citizens from the United States.
But at the end of that month, the Cuban government launched the initiative of stores in foreign currencies, which raised multiple questions among the population about the permanence of the CUC in the domestic market.
The response of the Cuban authorities was then aimed at making the entry and circulation of dollars in the country more flexible. At the beginning of January, The BCC announced a resolution that allows the accounts of Cuban citizens to receive cash deposits in US dollars with the 10% tax. The measure came into force on January 18.
Fees imposed by Western Union range from 9 to 15 percent depending on delivery time and the payment method used for the transaction, while the Cuban government receives approximately 20 percent of the surcharge paid by customers.
If Western Union finally implements the delivery of remittances in dollars in Cuba, numerous money transfers that have currently been frozen by user decision would become viable, such as inheritance transactions from the United States.
"Many people have stopped sending money from blocked [inheritance] accounts because they do not want to receive it in CUC, and there is no other way to send it legally other than through Western Union," said José I. Valdés, lawyer for probate matters in Miami and representative of dozens of clients on the island.
Since 2003, the Treasury Department authorized that estates granted in the United States to residents in Cuba can be sent through Western Union from frozen accounts in US banks. Currently, up to $10,000 dollars per day can be sent to Cuban beneficiaries on the island, since the restrictions on the amount of remittances, imposed by the Office of Foreign Assets Control (OFAC) last year, do not apply to transfers of estates.
Western Union, headquartered in Denver, Colorado, with annual revenues estimated at $6 billion, provides money transfer services to Cuba through more than 420 branches located in 168 municipalities in the country. Although the company does not report data on the value of its transactions, it is the largest operator of the $3.5 billion in cash that annually arrives in remittances to recipients on the island.
Western Union has an agreement with FINCIMEX, a private company and subsidiary of the CIMEX corporation, for its operations in Cuba. The company was authorized by the Treasury Department in 1999 to establish branches in Cuban territory, and as of 2016 it can process money transfers from anywhere in the world to the island, through the use of its cross-border payments platform.
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