The US sanctions FINCIMEX, the company that delivers Western Union remittances in Cuba

They also sanctioned three hotels, two diving centers and a marine park for tourists under the control of the regime's military forces.

Sucursal de Western Union en La Habana. © CiberCuba
Western Union branch in Havana. Photo © CiberCuba

This article is from 3 years ago

The administration of Donald Trump added this Wednesday the financial company FINCIMEX in the blacklist of Cuban entities that are prohibited from negotiating with United States companies, which becomes a serious obstacle to the processing of Western Union remittances to Cuba.

The sanction against FINCIMEX was announced by the Secretary of State, Mike Pompeo, as part of seven new additions to the List of Cuban Restricted Entities (CRL) of the Department of State, which also include three hotels, two diving centers and a maritime park under the control of the military forces.

"These seven sub-entities disproportionately benefit the Castro dictatorship, a regime that uses the profits from these businesses to oppress the Cuban people and finance its interference in Venezuela, at the expense of the Cuban people or private enterprise in Cuba," Pompeo said in a statement.

The statement indicates that, in particular, the addition of the financial institution FINCIMEX to the CRL "will help address the regime's attempts to control the flow of foreign currency that belongs to the Cuban people."

"The [Cuban] people should have the freedom to decide what to do with their own money," Pompeo said.

The measure raises a question about the Western Union operations in Cuba, since FINCIMEX is the entity designated for the processing of remittances to residents on the island. Incorporated in Panama as a private Cuban company in 1984, the financial company is a subsidiary of CIMEX and is under the umbrella of the Business Administration Group (GAESA), controlled by the Revolutionary Armed Forces (FAR).

FiNCIMEX It is also the only banking institution that processes all electronic cards in the country, including credit card transactions (Visa and Mastercard) issued abroad, which has been a factor of questioning by Trump administration officials.

It is not clear whether Western Union will have to change its agreement with FINCIMEX and the terms under which it will have to carry out its operations from now on. Western Union has been authorized by the Treasury Department to operate in Cuba since 1999, an argument that the company can make as part of a humanitarian service to the Cuban people.

Contacted by CyberCuba, Western Union said it is analyzing the announcement and will make a statement soon.

In fact, the true scope of the restriction on FINCIMEX will not be known until the Treasury Department publishes the regulations to implement the measure, on June 12. Even the State Department's CRL had not been updated this Wednesday night.

In addition to FINCIMEX, the entities sanctioned this Wednesday are the Hotel Marqués de Cárdenas in Montehermoso and the Hotel Regis, in Havana; the Hotel Playa Paraíso (former Pestana Cayo Coco), in Ciego de Avila; the Cayo Naranjo Dolphinarium, in Rafael Freyre, Holguín; and the Varadero Diving Center and the Gaviota Las Molas International Diving Center, as confirmed to CyberCuba a State Department spokesperson.

But everything indicates that the scenario for sending remittances to Cuba could radically change, affecting the foreign currency income of thousands of residents on the island. The impact on the Cuban economy could be devastating if the limited sources of access to hard currency are taken into account after the drop in tourism due to the coronavirus crisis.

"It could be a very hard blow for the Cuban economy if the sanction forces all operating agents that have established contracts, including Western Union, to separate from FINCIMEX," he told CyberCuba economist Emilio Morales, president of The Havana Consulting Group (THCG), based in Miami.

Denver-based Western Union 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 that annually arrive in remittances to recipients based on the island.

The policy imposed by the Trump administration to reinforce the embargo on Cuba has focused on both remittance shipments and Western Union operations. Last October the Treasury Department imposed a limit of $1,000 per quarter to the shipments that a sender can make to a Cuban citizen on the island, and since February Western Union operations for Cuba were restricted to shipments from the United States, eliminating remittances from third countries.

According to Morales, around 45 percent of the money that arrives in Cuba through remittances from different parts of the world does so through informal channels. The rest of the shipments are distributed between Western Union and about 20 operating agents that have contracts signed with American International Services (AIS), a CIMEX branch based in Panama since 1988.

The registered president of AIS is Colonel Héctor Oroza Busutil, who also appears as the highest figure of the CIMEX corporation.

Additionally, the sanction would affect all companies that provide payment services. using the AIS card.

"All international companies that bring remittances to Cuba have to have contracts with AIS, including operators in Europe, Latin America and Canada," Morales said. "And the measure can erode those ties, because doing business with a company sanctioned by the State Department has an indisputable effect."

Only travel agencies that send remittances to Cuba through "mules" or travelers commissioned to deliver cash would not be affected by the regulations against FINCIMEX.

The State Department's decision comes just a week after a resolution of the Central Bank of Cuba It would open the possibility for residents abroad, Cubans or of any nationality, to establish dollar accounts in banking institutions on the island and use the money for purchases in the domestic retail market.

The designation in the CRL prevents transactions by US citizens and entities with companies owned or controlled by the Cuban military, intelligence and security services, according to the State Department.

Both CIMEX and GAESA are on the list of 235 restricted Cuban entities of the State Department, which prevents them from commercial ties with American companies and businessmen.

The United States had not added entities to the CRL since November 2019, when five hotels located in the main tourist centers of the country were included.

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Wilfredo Cancio Isla

CiberCuba journalist. Doctor in Information Sciences from the University of La Laguna (Spain). Editor and editorial director at El Nuevo Herald, Telemundo, AFP, Diario Las Américas, AmericaTeVe, Cafe Fuerte and Radio TV Martí.

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