Western Union resumes money transfers to Cuba after “cybersecurity incident.”

Western Union resumed its money transfer services to Cuba on Thursday after suspending them in January when the Cuban government reported a “cybersecurity incident” that compromised its banking systems.

The service had been suspended since Jan. 28, days before a Cuban official announced a “cybersecurity incident” that affected the country’s “electronic payment systems.”

Western Union said in a statement that customers can send up to $2,000 in a single transaction from any of its U.S. locations, online or using its mobile app. The funds can be sent to individuals in Cuba with accounts at Banco Popular de Ahorro, Banco Metropolitano SA and Banco de Crédito y Comercio.

“We understand that our service provides a critical connection between people living in the United States and their families living in Cuba,” said Rodrigo Garcia Estebarena, president of Western Union North America and Latin America Division. “We are pleased to resume service to this important corridor and provide essential money transfer services to the island’s residents.”

The company said the funds would be available in Cuba on the same day, including on weekends and holidays. The transfers are made in dollars but are deposited into accounts in MLC, Cuba’s virtual currency.

Many Miami residents regularly use the service to send money to their families in Cuba. However, sources in Cuba and the American business community question how much of the remittance market Western Union has captured after many transactions shifted to the informal dollar-denominated market in recent years.

The company was forced to close more than 400 offices in Cuba for the first time in late 2020 after the Trump administration sanctioned Fincimex, Western Union’s processing partner on the island, over its ties to the Cuban military. Two years later, the Cuban government agreed to create a new financial entity to process remittances on the island: Orbit SA. Western Union resumed services in March last year.

But a lot has changed on the island since 2020. The economy is in free fall and shortages are widespread. Because state-owned stores selling products in MLC are typically empty, money transfers from abroad, which can only be redeemed in local Cuban currencies, are less attractive. In theory, the MLC is a convertible currency. Still, the government has admitted that its banks do not have enough dollar reserves to cover their operations and that they rarely allow Cubans to receive their money in dollars.

The story goes on

When Western Union was forced to leave the island in 2020, its money transfer business shifted to informal channels, using so-called “mulas” who personally brought the money into the country. There are a growing number of agencies that allow customers in the US to send money through popular remittance services like Zelle. The agencies then pay people to deliver dollars in cash to the recipient on the island.

The informal remittance market was also crucial to the development of an emerging private sector on the island.

With Cuba cut off from most of the international banking system due to the U.S. economic embargo, Cuban entrepreneurs have used the same remittance agencies to move their money off the island to pay vendors abroad. You pay dollars or euros in cash to representatives of these agencies, and the agencies, in turn, pay overseas delivery providers for a fee. The agency can use the money paid by private entrepreneurs for intra-island transfers, eliminating the need to hire people to transport the money into the country.

The informal system has raised some concerns because it could be used to launder money. A Cuban-American woman arrested at Tampa International Airport in February has been charged with smuggling $100,000 from Cuba. She said she was paid to bring cash from the island to the United States several times a month.