backOn May 1, 2026, President Trump issued an Executive Order (the “Executive Order”) under the International Emergency Economic Powers Act (“IEEPA”) authorizing new, targeted sanctions related to Cuba, including blocking sanctions, travel bans, and secondary sanctions on foreign financial institutions. The Executive Order takes further steps with respect to the national emergency for Cuba declared in Executive Order 14380, issued on January 29, 2026, and empowers the State Department and Treasury Department to impose far-reaching sanctions and other restrictions with respect to Cuba.
The Executive Order represents a significant expansion of the U.S. sanctions regime applicable to Cuba. While the United States has maintained comprehensive sanctions on Cuba for decades under the Trading With the Enemy Act (“TWEA”), as promulgated by the Cuban Assets Control Regulations (“CACR”), and Helms-Burton Act, those authorities primarily impose broad trade and financial restrictions on persons subject to U.S. jurisdiction engaging in transactions or dealings in Cuba, restrictions on U.S. person travel to Cuba, and consequences for “trafficking” in U.S. property confiscated by the Cuban government.
By invoking IEEPA, an authority that provides broader enforcement tools than TWEA, the Executive Order extends U.S. enforcement well beyond traditional TWEA-based restrictions and significantly increase secondary sanctions risk for non-U.S. financial institutions that facilitate Cuba-related transactions. The practical effect is to bring the Cuba sanctions framework closer in structure and enforcement reach to the Iran and Russia sanctions programs, which historically have carried aggressive secondary sanctions consequences, while maintaining the existing Cuba restrictions. While the Executive Order does not designate any specific individuals or entities as blocked persons, we would expect the State Department and Treasury Department to announce new sanctions designations under this new authority in the near future.
This client alert summarizes the sanctions and other restrictions imposed by the Executive Order, highlighting the key considerations for companies and financial institutions with any nexus to Cuba.
Restrictions Imposed By The Executive Order
Sanctionable Conduct and Blocking Sanctions
The Executive Order authorizes the State Department and Treasury Department to designate any foreign person who the agencies determine:
- Operates in specified sectors in Cuba, including energy, defense, metals and mining, financial services, and security, or in any other sector that the Treasury Department (in consultation with the State Department) may designate;
- Is owned, controlled or directed by, or acts on behalf of, the Government of Cuba or any person blocked pursuant to the Executive Order;
- Has materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, the Government of Cuba or any person blocked pursuant to the Order;
- Is or has been a leader, official, senior executive officer, or member of the board of directors of the Government of Cuba or any entity blocked pursuant to the Executive Order;
- Is a political subdivision, agency, or instrumentality of the Government of Cuba;
- Is responsible for or complicit in serious human rights abuses or corruption in Cuba; or
- Is an adult family member of a person designated pursuant to the Executive Order.
All property and interests in property in the United States or within the possession or control of any U.S. persons of the designated persons must be “blocked” (i.e., frozen). U.S. persons are also prohibited from engaging in transactions with persons designated pursuant to the Executive Order, including the making or receipt of any contribution of funds, goods, or services to or for the benefit of such persons. The Executive Order also prohibits any evasion of or conspiracy to violate these restrictions.
The breadth of the designation categories—particularly the catch-all provision allowing the U.S. government to identify additional sectors of the Cuban economy—means that virtually any foreign person with meaningful ties to the Cuban government or economy could be at risk of designation. Companies and financial institutions should treat this expansive authority as a signal that the U.S. government intends to aggressively identify and sanction Cuba-related targets going forward.
Travel Restrictions
The Executive Order suspends entry into the United States of designated individuals, except where the State Department determines that entry of such individual is in the national interest.
Sanctions on Foreign Financial Institutions
The Executive Order authorizes the Treasury Department, in consultation with the State Department, to impose sanctions on any foreign financial institution that has conducted or facilitated a “significant transaction” on behalf of a person blocked pursuant to this Executive Order. These penalties can include losing the ability to maintain correspondent or payable-through accounts in the United States or having the institution's own assets frozen—effectively cutting off access to the U.S. financial system.
“Foreign financial institution” is defined broadly to include banks, money services businesses, investment companies, insurance companies, securities dealers, and similar entities, but excludes certain international financial institutions (e.g., the IMF). The broad nature of this definition means that a wide range of non-U.S. financial services firms—not just traditional banks—could face exposure under this new framework. The Executive Order does not define “significant transaction”; however, under other sanctions regimes (e.g., Russia) the Treasury Department’s Office of Foreign Assets Control (“OFAC”) has considered the totality of the facts and circumstances when determining whether a transaction or transactions are “significant.” In general, OFAC may assess the following factors: (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 persons sanctioned pursuant to Executive Order; (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.1See OFAC FAQ 1151, available here https://ofac.treasury.gov/faqs/1151.
Regional application of the Cuba sanctions program has traditionally been subject to significant divergence, including the establishment of anti-blocking provisions in markets like the EU and Canada. Given the potential consequences of being subject to secondary sanctions, however, foreign financial institutions may need to reassess their approach and level of risk.
Key Takeaways and Recommended Steps
The most consequential element of the Executive Order for the international business community is the authorization of secondary sanctions against foreign financial institutions. This secondary sanctions authority significantly raises the sanctions risk profile for non-U.S. financial institutions that facilitate transactions related to Cuba and represents a fundamental shift in how the U.S. government can enforce its Cuba policy extraterritorially. International banks and other financial services providers will need to reassess their exposure to Cuba-related transactions and ensure that their compliance programs are equipped to screen for and identify transactions involving persons who may be designated under the Executive Order. Even institutions that have historically maintained Cuba-related business lines segregated from their U.S. operations may no longer be insulated from U.S. secondary sanctions risk.
In light of these developments, we recommend that affected companies take the following steps promptly:
Reassess Cuba-related exposure. Financial institutions and multinational companies should conduct an immediate review of all existing business relationships, customer accounts, and transaction flows that have any direct or indirect nexus to Cuba, Cuban nationals, or the Cuban government.
Enhance sanctions screening and compliance programs. Institutions should update their sanctions screening tools and compliance procedures to be prepared for any new designations under the Executive Order, including in the energy, defense, metals and mining, financial services, and security sectors in Cuba and the broad catch-all provision that allows the Treasury Department to designate additional sectors of the Cuban economy. Compliance teams should be prepared for new designations to be issued on an ongoing basis.
Evaluate correspondent banking and payment processing risks. Non-U.S. financial institutions that maintain U.S. correspondent accounts should carefully evaluate whether any of their Cuba-related activities could be deemed a “significant transaction” on behalf of a blocked person, which could trigger the loss of access to the U.S. financial system.
Reassess segregation strategies. Institutions that have historically maintained Cuba-related business lines segregated from their U.S. operations should reassess whether such segregation remains sufficient in light of the new secondary sanctions framework, which may reach activity that was previously considered outside the scope of U.S. sanctions enforcement.
Monitor for further regulatory guidance. The Executive Order delegates significant interpretive discretion to the Treasury Department and State Department. Companies should closely monitor for implementing regulations, FAQs, and guidance from OFAC that may clarify the scope of key terms—including the undefined “significant transaction” standard—and provide further detail on enforcement priorities.
We will continue to monitor developments related to the Executive Order. Please do not hesitate to reach out if you have questions about how these new sanctions may affect your operations.