United States Announces New Cuba-Related Sanctions Program

On May 1, 2026, President Donald Trump issued Executive Order 14404, “Imposing Sanctions on Those Responsible for Repression in Cuba and for Threats to United States National Security and Foreign Policy” (the EO).¹ The EO establishes a new U.S. sanctions program targeting Cuba that authorizes the imposition of sanctions on persons with certain ties to, or engaged in certain activities in, Cuba, including persons

• operating in certain sectors of the Cuban economy,
• affiliated with the Government of Cuba or other persons sanctioned under the EO,
• engaging in human rights abuses or corruption relating to Cuba, or
• facilitating significant transactions involving persons sanctioned under the EO.

While existing U.S. sanctions have long prohibited U.S. persons from engaging in most dealings involving Cuba, the EO meaningfully increases the sanctions risks for non-U.S. persons engaged in Cuba-related activities. In addition, on May 7, the Treasury Department Office of Foreign Assets Control (OFAC) took a number of related actions pursuant to the EO, including issuing a new Cuba-related general license and new Cuba-related FAQs and updating the Specially Designated Nationals and Blocked Persons list (SDN List). We discuss these developments below.

I. A new framework for U.S. sanctions targeting Cuba

Existing U.S. sanctions targeting Cuba constitute the longest-running U.S. sanctions program and are considered “comprehensive,” meaning that persons subject to U.S. jurisdiction are prohibited from engaging in virtually all dealings in or with Cuba absent an authorization. The regulations implementing this comprehensive embargo are primarily found in the Cuban Assets Control Regulations (the CACR). Unlike all other current U.S. sanctions programs, which are imposed under the authority of the International Emergency Economic Powers Act (IEEPA), the authorizing statute of the CACR is the Trading With the Enemy Act (TWEA).

The EO breaks from the longstanding approach for Cuba sanctions by establishing a new, and somewhat — though not entirely — standalone U.S. sanctions program targeting Cuba pursuant to IEEPA rather than TWEA. This shift introduces concepts and terms, including the threat of secondary sanctions, for the first time to U.S. sanctions targeting Cuba. While these concepts and terms are similar to and familiar from other IEEPA-based sanctions programs, they may create certain tensions with the existing CACR. As confirmed by the new OFAC FAQs,² the EO does not replace or supersede the CACR, as both serve as different legal bases for the imposition of Cuba-related sanctions. Nor does the EO appear to create a basis on which the U.S. government could impose civil or criminal penalties on non-U.S. persons whose activities would not already fall within the scope of the CACR. But it does create new risks for parties — particularly non-U.S. persons — engaged in Cuba-related activities. In addition to continuing to abide by preexisting sanctions targeting Cuba, parties will now need to consider taking steps to address these emerging risks.

II. Authorization of additional sanctions

The EO authorizes the Secretary of State and the Secretary of the Treasury, each in consultation with the other, to impose sanctions on foreign persons (i.e., non-U.S. individuals and entities) that meet certain designation criteria. As described below, OFAC has already begun designating individuals and entities pursuant to this new authority.³ With the EO, there are now several categories of activities or affiliations that can put both Cuban and third-country persons at risk of being targeted under U.S. sanctions.

a) Targeted sectors of the Cuban economy

The EO authorizes the imposition of blocking (i.e., asset-freezing) sanctions on foreign persons determined to operate or have operated in the energy, defense and related materiel, metals and mining, financial services, or security sectors of the Cuban economy or any other sector of the Cuban economy that the Secretary of the Treasury may later identify. OFAC has not yet defined each of these sectors in the context of the EO. However, it has adopted broad definitions when defining these sectors in other sanctions programs.⁴ It would be reasonable to expect a similarly broad approach to the definitions of the sectors of the Cuban economy targeted here. The list of targeted sectors is not static: Treasury may, at its discretion, add more sectors to the list of those that present designation risk under the EO.

b) Persons affiliated with the government of Cuba or blocked persons

The EO also authorizes the Secretary of State and the Secretary of the Treasury to impose blocking sanctions on foreign persons based on certain affiliations with or connections to the government of Cuba or other persons sanctioned pursuant to the EO. Specifically, the EO authorizes the imposition of sanctions on foreign persons determined to

• be owned, controlled, or directed by, or to have acted or purported to act for or on behalf of, directly or indirectly, the government of Cuba or a person blocked under the EO;
• own or control, directly or indirectly, a person blocked under the EO;
• have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of (collectively, material assistance), the government of Cuba or a person blocked under the EO;
• be or have been a leader, official, senior executive officer, or member of the board of directors of the government of Cuba or an entity whose property or interests in property are blocked pursuant to the EO;
• be a political subdivision, agency, or instrumentality of the government of Cuba; or
• be an adult family member of a person designated pursuant to the EO

(each of the foregoing referred to herein as an Affiliated Person).

Under the CACR, the government of Cuba, persons acting on its behalf, and organizations under its ownership or control are already deemed “specially designated nationals” (SDNs), and any national of Cuba falls within the broader category of “designated national.” The CACR subjects SDNs and designated nationals of Cuba to blocking sanctions. The EO goes beyond this, however, by subjecting foreign persons to the risk of having sanctions imposed on them for providing material assistance to the government of Cuba or persons blocked pursuant to the EO. As a result, the authorization to impose sanctions on Affiliated Persons has the potential to significantly expand the scope of U.S. sanctions targeting Cuba.

c) Human rights abuses and corruption

The EO also authorizes the imposition of blocking sanctions on foreign persons determined to be responsible for or complicit in, or to have directly or indirectly engaged in or attempted to engage in, serious human rights abuses in Cuba or corruption related to Cuba. The EO provides the following examples of corruption that would be within the scope of the designation authority: (i) the misappropriation of public assets, (ii) expropriation of private assets for personal gain or political purposes, or (iii) bribery.

d) Foreign Financial Institutions (FFIs)

In a separate section from the designation authorities described above, the EO authorizes the Secretary of the Treasury to impose “secondary sanctions” on FFIs determined to have conducted or facilitated any significant transaction(s) for or on behalf of a person whose property or interests in property are blocked pursuant to this EO. The Secretary of the Treasury may impose either blocking sanctions or sanctions prohibiting the opening of or imposing strict conditions on the maintenance of correspondent accounts or payable-through accounts in the United States (CAPTA sanctions) on FFIs that meet the designation criteria.

The EO defines the term FFI broadly to mean

any foreign entity that is engaged in the business of accepting deposits; making, granting, transferring, holding, or brokering loans or credits; purchasing or selling foreign exchange, securities, futures, or options; or procuring purchasers and sellers thereof, as principal or agent. It includes but is not limited to depository institutions; banks; savings banks; money services businesses; operators of credit card systems; trust companies; insurance companies; securities brokers and dealers; futures and options brokers and dealers; forward contract and foreign exchange merchants; securities and commodities exchanges; clearing corporations; investment companies; employee benefit plans; dealers in precious metals, stones, or jewels; and holding companies, affiliates, or subsidiaries of any of the foregoing.

OFAC retains a substantial amount of discretion in determining whether a transaction is “significant” for purposes of these secondary sanctions. In the context of other sanctions programs, OFAC has issued guidance stating that it may consider the “totality of the circumstances” when evaluating whether a transaction or transactions are significant.⁵

III. New designations and FAQs

On May 7, 2026, OFAC designated one new individual under the EO. It also modified the designation authority for two entities already on the SDN List to include the EO — thereby giving OFAC the authority to impose sanctions on non-U.S. persons that engage in certain dealings with these entities, as discussed above. The latter point is key: Non-U.S. companies with dealings in Cuba need to monitor not just for new additions to the SDN List but also for cases where the designation authority for preexisting SDNs is expanded to include the EO. When the EO is added as a designation authority, non-U.S. persons who deal with these SDNs can be exposed to sanctions risks that did not previously apply.

OFAC also made a commitment to temporarily refrain from exercising its new sanctions authorities under the EO in connection with certain dealings involving one of these entities. The Grupo de Administración Empresarial S.A. (GAESA), a Cuban military-controlled umbrella enterprise with interests in various sectors, was added to the SDN List in 2020. OFAC modified the designation authority for this entity to include the EO. However, in connection with that modification, OFAC stated in a new FAQ that the U.S. government “does not intend to target foreign persons, including FFIs, pursuant to E.O. 14404 for engaging in transactions ordinarily incident and necessary to the wind down of transactions involving GAESA, or any entity in which GAESA owns, directly or indirectly, a 50 percent or greater interest, through June 5, 2026.”⁶

Thus, this FAQ provides comfort to non-U.S. persons that wind-down activities involving GAESA will not trigger sanctions exposure before June 5. It remains to be seen whether OFAC will issue similar guidance regarding sanctions risks for other entities designated under the EO. In addition, as OFAC cautions, non-U.S. persons, including FFIs, should continue to exercise care, as “actions to return assets to a sanctioned party or transfer them to another jurisdiction for potential use by the target could expose non-U.S. persons to significant sanctions risk.”

IV. How the EO fits within the existing sanctions framework targeting Cuba

The EO exists neither entirely apart from nor entirely within the framework of existing U.S. sanctions targeting Cuba. As a result, parties will need to consider the interplay of the two programs when assessing sanctions risk with respect to Cuba. We discuss below a few of the key issues that could arise.

a) Who is required to comply?

One difference between the previously existing Cuba sanctions regime implemented pursuant to the CACR and the EO (which aligns with IEEPA-based sanctions programs for other countries) is the scope of the persons who must comply. The EO requires compliance by “U.S. persons.” It adopts the same definition of that term used in other IEEPA sanctions programs — which includes “any United States citizen, lawful permanent resident, entity organized under the laws of the United States or any jurisdiction within the United States (including foreign branches of such entities), or any person in the United States.” The CACR, however, requires compliance by persons “subject to the jurisdiction of the United States.” This broader term encompasses all U.S. persons, as defined in the EO, plus all other entities, wherever located, that are owned by U.S. persons (including non-U.S. subsidiaries of U.S. persons). Thus, non-U.S. subsidiaries of U.S. persons must, as before the EO, comply with the sanctions prohibitions in the CACR but are not necessarily subject to the prohibitions in the EO (absent a U.S. nexus). However, engaging in activity within the scope of the EO exposes non-U.S. entities to the risk of being targeted by sanctions themselves, which could be more consequential for non-U.S. persons than violating the prohibitions in the CACR.

b) Applicability of existing authorizations

The EO provides, in Sections 2(b) and 4(c), that the sanctions on persons designated under the EO “shall not apply to activities authorized by, and shall not affect the validity of, any license issued pursuant to [the CACR].” OFAC subsequently issued General License (GL) 1 on May 7, 2026, which authorizes transactions that would otherwise be prohibited under the EO to the extent such transactions are authorized or exempt under the CACR, including transactions authorized by a general or specific license pursuant to the CACR.

A distinction should be made, however, between activities authorized under the CACR and those that are not prohibited because they are outside its scope. Neither the EO nor GL 1 indicate that the authorization applies to activity that is not prohibited under the CACR. Rather, both are framed in terms of activity that is authorized by license — general or specific — issued pursuant to the CACR. This may prove to be a difficult distinction to navigate in practice.

c) Impact on the “U-turn” authorization

The EO also introduces tension between its new designation authorities and the “U-turn” authorization found in the CACR at 31 C.F.R. § 515.584(d). Under the U-turn authorization, U.S. banking institutions are authorized to process funds transfers originating and terminating outside the United States that would otherwise be prohibited under the CACR, provided that neither the originator nor the beneficiary is a person subject to U.S. jurisdiction. OFAC has issued guidance stating that this authorization may be relied on notwithstanding the involvement of an SDN of Cuba.⁷ This authorization is seemingly at odds with the new designation authorities, which authorize the imposition of sanctions on non-U.S. persons for, among other things, engaging in certain dealings with persons blocked under the EO. The Trump administration may resolve this tension by revoking the U-turn authorization, as the first Trump administration did to an analogous Obama-era authorization. The U-turn authorization was later reinstated by President Joe Biden on May 29, 2024, and, for the time being, remains in place.

V. Key takeaways

U.S. persons (and their non-U.S. subsidiaries) have long been required to comply with the United States’ comprehensive sanctions targeting Cuba under the CACR and TWEA. The EO may not have a significant impact on the activities of these persons and companies. For non-U.S. persons, however, the EO may present new risks and challenges. The EO creates new sanctions designation risks for a broad range of activities in or involving Cuba, and any person with touchpoints to Cuba should consider how the EO affects its U.S. sanctions risk profile.

The EO may also reflect an increased willingness by the Trump administration to deploy sanctions in pursuit of its foreign policy goals after the Supreme Court limited the administration’s ability to use tariffs to do so. The EO was issued with the stated rationale of “tak[ing] further steps with respect to the national emergency declared in Executive Order 14380 of January 29, 2026.” Executive Order 14380 authorized so-called “secondary tariffs” on nations for engaging in certain dealings with Cuba, but these provisions were rendered ineffectual when the Supreme Court held in Learning Resources, Inc. v. Trump that IEEPA does not authorize the imposition of tariffs by the President. The pivot to sanctions in the EO comes after this decision by the Supreme Court on February 20, 2026, and could signal an increased appetite for the use of sanctions to pursue foreign policy aims that the Trump administration had previously used tariffs to pursue.

In addition, the EO may present additional compliance challenges for parties in the EU, UK, and Canada due to sanctions “blocking” regulations in these jurisdictions. These blocking regulations prohibit persons in these jurisdictions from complying with specified U.S. sanctions, including, in each case, U.S. sanctions targeting Cuba that predate the EO. It remains to be seen whether the EO will be added to the list of U.S. sanctions subject to blocking regulations in any or all of these jurisdictions. If this happens, EU, UK, and Canadian persons may be forced to navigate the potentially conflicting demands of avoiding U.S. sanctions designation risk and complying with the law in their respective jurisdictions.

Sidley’s attorneys are already actively advising many of our clients on risks presented by the EO and are closely monitoring its implementation as well as other sanctions developments. Please reach out to our team if you have any questions on this continuously evolving regulatory landscape.

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¹ Federal Register, Executive Order 14404 of May 1, 2026, available at https://ofac.treasury.gov/media/935581/download?inline.

² U.S. Dep’t of the Treasury, OFAC, FAQ 1251-1256 (May 7, 2026), available at https://ofac.treasury.gov/faqs/added/2026-05-07.

³ U.S. Dep’t of the Treasury, OFAC, Press Release, Counter Terrorism and Iran-related Designations; Cuba Designation and Designations Updates; Issuance of Cuba-related General License and Frequently Asked Questions (May 7, 2026), available at https://ofac.treasury.gov/recent-actions/20260507.

⁴ See, e.g., U.S. Dep’t of the Treasury, OFAC, FAQ 1126 (updated Jan. 10, 2025), available at https://ofac.treasury.gov/faqs/1126 (defining sectors in the context of Executive Order 14024 targeting Russia).

⁵ U.S. Dep’t of the Treasury, OFAC, FAQ 1151, (updated June 12, 2024), available at https://ofac.treasury.gov/faqs/1151 (“some or all of the following factors may be considered: (a) the size, number, and frequency of the transaction(s); (b) the nature of the transaction(s); (c) the level of awareness of management and whether the transactions are part of a pattern of conduct; (d) the nexus of the transaction(s) to [sanctioned persons], or to persons operating in [targeted sectors]; (e) whether the transaction(s) involve deceptive practices; (f) the impact of the transaction(s) on U.S. national security objectives; and (g) such other relevant factors that OFAC deems relevant”); see also U.S. Dep’t of the Treasury, OFAC, FAQ 671, (Aug. 6, 2019), available at https://ofac.treasury.gov/faqs/671.

⁶ U.S. Dep’t of the Treasury, OFAC, FAQ 1254, (May 7, 2026), available at https://ofac.treasury.gov/faqs/1254.

⁷ U.S. Dep’t of the Treasury, OFAC, FAQ 736 (updated Aug. 27, 2024), available at https://ofac.treasury.gov/faqs/757.