Remittances to Cuba Could Be in Peril After New Announcement by The Trump Administration

Remittances to Cuba, the second-largest source of revenue for the country and a lifeline for many families, could be in danger after the U.S. State Department included the Cuban company Fincimex on its list of restricted entities on Wednesday.

Secretary of State Mike Pompeo announced the inclusion of seven Cuban companies and hotels in the list of restricted entities linked to the Cuban military. Persons subject to the U.S. jurisdiction are prohibited from engaging in direct financial transactions with these entities.

Fincimex, a subsidiary of Cimex, —which is part of GAESA, a larger conglomerate of companies controlled by the Cuban military— processes remittances to Cuba and is the exclusive representative of Western Union on the island. Western Union offers a popular service through which thousands of Cubans in South Florida send money to their relatives.

Fincimex, which is registered in Panama, is also the only financial institution that processes “all types of electronic cards in the country,” including transactions involving cards issued by foreign banks, according to information on the Cimex website.

The inclusion of Fincimex in the list of blocked entities “will help address the regime’s attempts to control the flow of hard currency that belongs to the Cuban people,” Pompeo said in a statement. “The people should have the freedom to decide what to do with their own money.”

In October last year, the Trump administration limited remittances to Cuba to $ 1,000 per quarter.

It is not immediately clear how the Western Union agreement with Fincimex to send money to Cuba would be affected, since the Treasury Department will not publish the new regulations until June 12. The company has a license from the U.S. government for its business with Fincimex.

Treasury did not immediately reply to a request for comment. A Western Union spokeswoman said the company was studying the announcement.

Experts estimate that a third or even half of the $3.7 billion annually sent by Cubans abroad to the island goes through informal channels, through “mulas” — people who travel to Cuba to carry money and other items.

“The rest is distributed among around 20 agents who have signed contracts with FINCIMEX, among which is Western Union,” Emilio Morales, president of The Havana Consulting Group, told the Herald.

Western Union is a popular option due to its broad network on the island and the ease it offers by allowing customers to send money through a mobile application.

Other companies in Miami and U.S. other cities that send remittances to Cuba could also be affected because they operate on the island through Fincimex, Morales said.

The State Department did not say why it decided to take this new step during a pandemic, when informal channels for sending money to Cuba are also being affected by travel restrictions.

“It is inhumane and the height of hypocrisy for Secretary Pompeo to claim that the Trump Administration stands with the Cuban people while attempting to cut off U.S. remittances to Cuban families in the middle of a pandemic,” said the executive director of the Cuba Study Group, Ric Herrero. “This measure will cause grave harm to countless Cubans who are already suffering from severe economic hardship and the strains of the Covid-19 crisis in their country.”

A State Department spokesperson said that the “the Cuban regime has increasingly sought to control all remittances and VISA and Mastercard transactions through a military-controlled financial institution.”

The spokesperson said that the Trump administration would increase the pressure on the regime “to restrict the funds it uses to perpetuate its repression of the Cuban people and intervention in Venezuela.”

Several experts said that the Cuban government could create another entity not associated with the military to handle remittances to the island.

“The Trump Administration expects that Western Union Company and Mastercard International will request Cuba either identify or create another entity or entities not affiliated with the Revolutionary Armed Forces of Cuba which would process the financial transactions.,” said John Kavulich, president of the US-Cuba Trade and Economic Council.

Another State Department spokesperson said the following entities were also added to the restricted list: Hotel Marqués de Cardenas de Montehermoso, the Hotel Regis, the Cayo Naranjo dolphinarium, the Varadero diving center and the international diving center Gaviota Las Molas.

The list was updated to include the Playa Paraíso Hotel, formerly Pestana Cayo Coco hotel, which was already among the blocked entities.

The new sanctions were announced the same day that Raúl Castro, who continues ruling the country as the head of the Communist Party, turned 89. (https://www.miamiherald.com/news/nation-world/world/americas/cuba/article243255211.html)