The Trump Administration announced on 3 June new measures designed to halt the flow of US remittances through the Cuban financial institution FINCIMEX. The company is the principal Cuban intermediary for Western Union and other money transfer companies, and the partner for foreign credit card companies.

The decision, which the US Government says was made on the basis that the company is linked to the Cuban military, potentially affects billions of dollars sent annually from the US to individual Cubans through well- established payment systems. Some estimates suggest that as many as a third of Cuban people depend in part on remittances from family and friends abroad.

The US additionally expanded its list of sanctioned tourism related enterprises to include six hotels, two scuba diving centres, and one marine park all of which are so far unnamed, but which it said were military owned. In an accompanying statement the US Secretary of State, Mike Pompeo, called on visitors ‘to support the Cuban small business owners who struggle to succeed despite the heavy restrictions placed upon them’ noting that the majority of the country’s tourism industry was owned and operated by the Cuban military.

Responding, Cuba’s President Miguel Díaz-Canel, described the United States Government as ‘immoral, arrogant and perverse’, saying on Twitter that it had escalated hostility against the people of the island. Cuba’s Foreign Minister, Bruno Rodríguez, said that the measures were aimed at affecting Cuban families and were ‘shameful and criminal amid efforts to defeat the COVID-19 pandemic’.

It is as yet unclear how the proposed new measures relating to money transfer will work. The US Government has said that it will not publish the new regulations until 12 June. Western Union which has been operating under a special US licence since 1999 has declined to comment but indicated that it is studying the decision.

Although Western Union is by far the biggest money service provider to Cuba with more than 400 outlets in the country, the decision will affect all Cubans using FINCIMEX’s AIS cards, a free Cuban debit card that can be recharged online and which makes it possible for Cuban citizens to receive money from their relatives abroad for use for daily expenditure or other purposes. The cards are used for payments received from most money transfer companies in the US including Global Shipping, Fonmoney, Barri Financial Group, Cubamax Travel, Real Transfer and Shipments to Cuba by CaribeExpress among others.

The decision is likely to negatively affect owners of a casa particular and other privately owned visitor facilities and small businesses, as the AIS card from FINCIMEX is widely used for transactions for Airbnb and other forms of private lodging.

Some commentators believe that the measure is intended to bolster electoral support for the US President among Florida’s Cuban American community, but others suggest that it may backfire as it will directly affect many Cuban Americans who have family and friends in Cuba.

In a Tweet, Ricardo Herrero, the executive director of the Cuba Study Group, an independent US group of Cuban American business leaders, described the decision as ‘inhumane and the height of hypocrisy’. ‘The Cuban people should absolutely have the freedom to decide what to do with remittances sent by their loved ones. But by sanctioning the state entity that channels and taxes those funds [without] providing an alternative, the Trump admin threatens to cut off all formal remittances’, he Tweeted.

The total value of remittances from the US to Cuba is unknown as no figures are published by the Cuban Government. The Havana Consulting Group however estimates that in 2018 total worldwide cash remittances to Cuba were US$3,691m. Academic projections made by the Association for the Study of the Cuban Economy suggest that in 2017 transfers from the US may have been somewhere between US$2,248m and US$6,034m. If correct, even the lower figure suggests that despite US claims that the new measure is meant to help the Cuban people, remittances remain a vital means of support for ordinary families and the informal economy.

The decision is expected to make commonplace the already growing alternative use of third-country money transfer agencies, as well as informal money transfer involving ‘mules’ carrying large sums of money, when Cuban airports reopen. This may facilitate money laundering.

The Obama Administration had lifted all restrictions on remittances in 2009. Then, the Trump Administration in 2019 restricted the sending of remittances to Cuba by limiting them to US$1,000 per quarter to a single close relative. FINCIMEX, is a subsidiary of CIMEX and was incorporated in 1984 in Panama.

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