In the midst of the pandemic that seriously affects the North American economy, the U.S. government has restricted the profits of Western Union by blocking remittances to Cuba.
Since September 2019, the U.S. has applied provisions to hinder the flow of remittances to Cuba. Taking place during the pandemic, the inclusion of Fincimex S.A. was added to the list of the State Department’s restricted entities.
The announcement was made last Friday. The move prevents remittances through U.S. companies with general licenses to the Island.
This measure will not only damage the remittances to Cubans but also those of the company.
According to the U.S. government, Fincimex is Western Union’s representative on the Island. The company has an enormous distribution and communications network throughout Cuba with more than 400 points of service. Western Union will not be able to continue this activity as of November 27.
Fincimex has an annual profit of around 60 million dollars which represents approximately 0.8% of Cuban GDP.
OFAC stated that remittances would not be interrupted if Cuba accepted the imposition of the U.S. government to establish its own payment network in Cuba. In other words, set up a private network not associated with the government.
Even without Fincimex’s management as a representative of Western Union, 70% of the network of payment points consists of companies also included on the list. These companies would also be forced to close.
None of this is can be achieved in 30 days, a term unilaterally set by the U.S. government for the enforcement of the new OFAC regulations.
The State Department estimated that between 2012 and 2016, remittances to Cuba are between 1.4 and 2 billion dollars annually.
Cuba is not among the first countries to receive remittances, however, the U.S. has not applied any restrictive measure in this regard against countries such as Mexico, China, India, the Philippines or Vietnam, which lead the statistics.
According to Cuba’s statistical yearbook, remittances Cubans receive represent only 2.5 percent of the island’s GDP. It is for this reason that the representative of the Cuban government, Minister of Foreign Affairs Bruno Rodríguez Parrilla, has indicated this measure fundamentally affects family ties between Cuban-Americans and their family on the island.
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David Urra is the chief marketing analyst at International Consulting & Representation Services/Cuba (IcarusCuba). He has produced market studies for a wide range of Latin American, European and U.S. clients exploring market entry possibilities in Cuba’s IT, tourism, ranching, pharmaceutical and manufacturing sectors.
