Western Union expands remittances to Cuba in thousands of locations, digital platforms

Western Union will expand remittance services to Cuba in thousands of retail locations in the United States and through the company’s digital platforms, the company said Thursday.

After a two-year halt, Western Union resumed limited money transfer services to Cuba through a pilot program in January, but it was available only in 24 locations in Miami, Hialeah and Coral Gables.

A company spokesperson, Brad S. Jones, said that the initial phase concluded and that Western Union was extending the “test” service to include more than 4,400 retail locations in the continental U.S. and Puerto Rico. Customers can now send money to Cubans also through the company’s website WesternUnion.com and mobile app.

Customers can send up to $2,000 in a single transaction to Cubans with debit cards or accounts at three banks: Banco Popular de Ahorro, Banco Metropolitano S.A. and Banco de Credito y Comercio. The money will be deposited in U.S. dollars.

To process transactions to Cuba, Western Union said in a statement that it signed an agreement with Orbit S.A., a government company created last year that received authorization from the Central Bank of Cuba in February 2022 to act as a non-banking financial institution to process money transfers to the island.

The spokesperson said Orbit S.A. “will act as Western Union’s bank account payout processor in Cuba.”

In a separate announcement on Facebook, Orbit S.A. said Thursday it would be expanding its operations in the United States, indicating it will be Western Union’s counterpart. The company said it has been processing remittances from Canada and Europe since last year.

According to Orbit’s Facebook page, the company had already been processing remittances sent through Cubamax and VaCuba, two Miami-based travel agencies.

Most financial transactions with Cuba are prohibited because of the U.S. embargo but remittances are generally allowed. The Trump administration toughened the embargo regulations to prohibit money transfers that involved companies linked to the Cuban military. Those regulations are still in force.

Western Union suspended operations in November 2020 after the Trump administration sanctioned two financial entities, Fincimex and Ais, that processed remittances for their links with GAESA, the conglomerate of companies run by the Cuban Armed Forces. Later, money transfer operators based in Miami negotiated a new channel, working with Banco Financiero Internacional, but the Trump administration sanctioned it too because the bank was linked to GAESA.

While U.S. companies working with Orbit S.A. had to submit documentation stating the company is not run by the armed forces, 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.

Until Orbit S.A. began quietly working with the Miami travel agencies, the Cuban government had refused to transfer the remittance business to a non-military company, despite assurances from the Biden administration that such a step would have resolved the issue. 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, since remittances from relatives abroad are a lifeline for many on the island.

“Western Union re-launching services in Cuba is welcome news,” said Ric Herrero, executive director of the Cuba Study Group. “Shutting down formal remittance channels in 2020 has neither helped the Cuban people nor weakened human rights violators in the government. If anything, it has contributed to Cuba’s skyrocketing inflation and the growth of a remittance black market rife with abuse.

“The more we establish formal and secure channels to send remittances to Cuba, the more the Cuban people will benefit,” he added.

Advocates of increased economic ties with the Cuban private sector also welcomed the Thursday announcement.

“We have seen fundamental changes to the Cuban economy over the past year, including an unprecedented end to the Cuban government’s historic monopoly on the importation and distribution of goods within the country,” said Matthew Aho, a Miami-based sanctions specialist with Akerman, a firm that represents many travel agencies and companies doing business with Cuba. “While many items remain scarce, many private Cuban businesses have begun to import and distribute a wide range of food and other consumer goods. Hopefully, this expansion of remittances will provide much-needed liquidity to Cuba’s emerging private sector, which is the only job-creating, high-growth sector in the entire Cuban economy.”

But for that to happen, the Cuban government also needs to issue regulations establishing a clear path for foreign investment in the private sector, said John Kavulich, president of the U.S.-Cuba Trade and Economic Council, who last year received authorization from the Treasury Department to invest and provide financing to a Cuban private business.

“The [Miguel] Díaz-Canel administration in Havana needs to now implement what it has reiterated for two years would be permitted: that small and medium private enterprises receive direct investment and direct financing from sources in the United States,” he said. “There is no valid reason for more stalling and depriving those private enterprises of resources they desperately need and the Biden-Harris administration has already authorized.”