Western Union Returns To The Cuba Marketplace; Initial Small Steps Should Lead To Vibrant Funds Transfer Opportunities For MSMEs In Cuba And U.S. Companies And U.S. Investors

Denver, Colorado-based Western Union Company (2022 revenue approximately US$4.6 billion) has re-commenced currency delivery service from the United States to the Republic of Cuba. The pilot in-person only program is operational in fewer than thirty locations in the State of Florida.

Customers in the United States may send funds to bank accounts and debit card accounts located at Republic of Cuba government-operated Banco Popular de Ahorro; Republic of Cuba government-operated Banco Metropolitano S.A.; and Republic of Cuba government-operated Banco de Credito y Comercio (Bandec).

There is a daily limit of US$2,000.00. Customers may not at this time send to their own Moneda Libremente Convertible (MLC) or debit cards in the Republic of Cuba. The deposits are only available in United States Currency. The recipients in the Republic of Cuba must present a Republic of Cuba government-issued “Carnet de Identidad.”

According to a representative of Republic of Cuba government-operated Central Bank of the Republic of Cuba (CBC), funds sent to the Republic of Cuba by Western Union Company are processed through Republic of Cuba government-operated Orbit S.A. which then directs the funds to the three financial institutions located in the Republic of Cuba. The goal is to expand the number of Republic of Cuba government-operated financial institutions participating in the pilot program.

There are two Florida-based companies with agreements to use Orbit S.A. for the transfer of funds from the United States to the Republic of Cuba. The first was Miami-based eight-office VaCuba which obtained a license in November 2022 from the Office of Foreign Assets Control (OFAC). VaCuba charges customers a 7% transfer fee on the value of the transaction.

The Official Gazette of the Republic of Cuba reported that Orbit S.A. was incorporated in the city of Havana by Notarial Deed No. 54, of February 3, 2020. The Official Gazette published the resolution signed by Sabina Wilson, president of the CBC, accepting Orbit SA’s request to “manage and process international transfers from abroad to Cuba” and “provide payment services from abroad through its infrastructure.” The origin of Orbit SA remains unknown.

Until November 2020, during the Trump-Pence Administration (2017-2021), currency transfers by Western Union to the Republic of Cuba were processed in the Republic of Cuba by Republic of Cuba government-operated Fincimex which managed the 407 points of distribution where Republic of Cuba nationals could obtain, in currency, transfers sent from the United States. The United States Department of State then included Fincimex in the Cuba Restricted List which listed entities located in the Republic of Cuba deemed to have connectivity with the Revolutionary Armed Forces (FAR) of the Republic of Cuba.

Since October of 2020, remittance forwarders, financial institutions, and companies in the United States asked repeatedly the government of the Republic of Cuba to permit other Republic of Cuba government-operated financial institutions to receive and send remittances. Those requests were denied by the government of the Republic of Cuba. Only in February 2022 did the government of the Republic of Cuba authorize another Republic of Cuba government-operated financial institution to process remittances.

U.S. Banks Doing What

In 2015, Pompano Beach, Florida-based Stonegate Bank (2017 assets approximately US$2.9 billion) acquired accounts for the Embassy of the Republic of Cuba in Washington, DC, and the Permanent Mission of the Republic of Cuba to the United Nations in New York after Buffalo, New York-based M&T Bank Corporation (2021 assets approximately US$150 billion) notified the embassy and mission that it would no longer provide services due to challenges with regulatory compliance for many accounts with embassies and missions.

Stonegate Bank received a license from the OFAC for a correspondent account at Banco Internacional de Comercia SA (BICSA), a member of Republic of Cuba government-operated Grupo Nuevo Banca SA, created by Corporate Charter No. 49 in 1993 and commenced operation in 1994.

According to the Republic of Cuba, “Its [BICSA] main activity is ‘enterprises’ bank’ carried through its central services and five branches based in the country’s capital, Santiago de Cuba and Villa Clara. It records all transactions in real time providing its customers with card and remote banking services while it is working on developing other methods of electronic banking. Its institutional clients, national or foreign, receive a complete accounting and documentary service, while national entities also enjoy of significant volumes of credit facilities. Practically all sectors of the economy benefit from all this, such as that of agriculture, the food industry, the basic and light industries, transportation, aviation, fishing, construction, domestic and foreign trade, the iron and steel industry, sugar, informatics, communications and others with not only economic importance but also social, such as health, water supply, education, culture and sports. Credit policy followed by the Bank is dictated in a collegiate way by its Credit Committee on the basis of a strict analysis and control in loan making. The Bank counts on correspondents in the five continents, the majority are first class banks, mainly Europeans and Americans. Equity capital of shareholders (Grupo Nueva Banca with the biggest share and Bancholding), near the USD95 millions with a balance ranging from 550 to 600 millions, make sure the Bank has a strong solvency ratio.”

Without explanation the Obama-Biden Administration did not authorize BICSA under a license from the OFAC to have a correspondent account at Stonegate Bank, so Stonegate Bank routed transactions for approximately eighty (80) customers on a regular basis through Panama City, Panama-based Multibank (2019 assets approximately US$5 billion) which had dealings with the Republic of Cuba.

However, on 16 June 2020, Bogota, Colombia-based Grupo Aval (2021 assets approximately US$110 billion) reported that “On May 25th, Banco de Bogotá, through its subsidiary Leasing Bogotá S.A. Panamá, acquired 96.6% of the ordinary shares of Multi Financial Group [Multibank]. As part of the acquisition process, MFG’s operation in Cuba was closed and as part of the transaction. Grupo Aval complies with OFAC regulations and doesn't have transactional relationships with Cuba.”

In 2017, Conway, Arkansas-based Home BancShares (2022 assets approximately US$18 billion) through its subsidiary Centennial Bank purchased Stonegate Bank. Stonegate Bank operations were absorbed into Centennial Bank.

In June 2022, Elk Grove Village, Illinois-based Chicago, Illinois-based First American Bank (2022 assets approximately US$6 billion) acquired from Centennial Bank an operating account (and Republic of Cuba-focused branch personnel) for the Embassy of the Republic of Cuba in Washington, DC. First American Bank continues to evaluate establishing a correspondent account with BICSA and if BICSA is authorized by the OFAC to establish a correspondent account with First American Bank, there would be an opportunity for two-way fund transfers for authorized transactions (agricultural commodities, food products, healthcare products (medical equipment, medical instruments, medical supplies, pharmaceuticals, informational materials, travel (visa processing, overflight fees, landing fees, accommodation payments- Airbnb, etc.), remittances, entrepreneurial activities (direct investment to and direct financing for privately-owned companies located in the Republic of Cuba, etc.).

With the 10 May 2022 license from the OFAC authorizing for the first-time direct equity investment in and direct financing to a privately-owned micro, small, and medium-sized enterprise (MSME) located in Cuba and owned by a Cuban citizen, the next logical decision by the Biden-Harris Administration (2021- ) is to authorize direct correspondent banking.

Investors and sources of financing in the United States must have a direct, efficient, and transparent means to send their funds to the Republic of Cuba and have a direct, efficient, and transparent means to receive their investment income, dividends, and loan payments.

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OFAC Authorizes Orbit S.A. In Cuba To Engage In Remittance Transactions- Not On Cuba Restricted List (CRL). Western Union Next Up To Return? November 18, 2022

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At 6:00 PM Today, Final [For Now] Western Union Transactions With Cuba Are [Temporarily Perhaps] Suspended November 23, 2020

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