OFAC expands Cuba sanctions and tightens financial and travel restrictions

Overview

On September 30, 2026, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) implemented significant changes to the U.S. sanctions framework concerning Cuba. The changes include new Cuba Sanctions Regulations (CSR), 31 C.F.R. Part 516, implementing Executive Order (E.O. or Order) 14404, as well as amendments to the long-standing Cuban Assets Control Regulations (CACR), 31 C.F.R. Part 515. OFAC also issued an alert highlighting increased sanctions risks associated with transactions involving Cuba, five new Cuba-related frequently asked questions and amendments to 29 existing Cuba-related FAQs.

The new CSR implement E.O. 14404, which became effective May 1, 2026, and established a new Cuba-related sanctions program, separate from and in addition to the CACR. E.O. 14404 authorizes sanctions against Cuban and non-Cuban foreign persons determined to meet specified criteria relating to Cuba, including persons operating in certain sectors of the Cuban economy, persons supporting the government of Cuba, or persons blocked pursuant to the Order or involved in specified serious human rights abuses or corruption related to Cuba.

The new framework also creates potential sanctions exposure for foreign financial institutions determined to have conducted or facilitated significant transactions for or on behalf of persons blocked pursuant to E.O. 14404. Available measures include restrictions on U.S. correspondent or payable-through accounts and blocking sanctions. 

Additionally, OFAC amended the CACR to restrict several categories of activity that were previously authorized. Among other changes, OFAC has expanded restrictions involving entities on the U.S. Cuba Restricted List (CRL) to cover indirect, as well as direct, financial transactions; eliminated authorization for certain “U-turn” transactions; removed an authorization relating to bank accounts maintained for Cuban independent private sector entrepreneurs; and narrowed certain travel-related authorizations.

Key features 

The new CSR implement E.O. 14404 and establish a separate regulatory framework for sanctions authorized by the Order. E.O. 14404 authorizes blocking sanctions against foreign persons determined to operate in specified sectors of the Cuban economy, currently including the energy, defense and related materiel, metals and mining, financial services, and security sectors. The Order additionally provides authority to target certain persons associated with or supporting the government of Cuba or persons blocked under the Order, as well as persons involved in specified serious human rights abuses or corruption related to Cuba.

These authorities are already being used. The U.S. government has made a series of designations under E.O. 14404, including September actions targeting individuals and entities associated with Cuba’s financial services, energy, metals and mining, defense, and related sectors. On September 17, OFAC added individuals and entities to the SDN List pursuant to E.O. 14404.

E.O. 14404 also creates potential sanctions exposure for foreign financial institutions that conduct or facilitate significant transactions for or on behalf of persons blocked pursuant to the Order. OFAC may as a result impose restrictions on such an institution’s U.S. correspondent or payable-through accounts or impose blocking sanctions.

OFAC previously issued General License 1, which generally authorizes transactions prohibited by E.O. 14404 to the extent those transactions are otherwise authorized or exempt under the CACR, including transactions authorized by a general or specific license. General License 1 does not authorize transactions otherwise prohibited by other provisions of OFAC’s regulations.

Additionally, OFAC amended Section 515.209 of the CACR to prohibit persons subject to U.S. jurisdiction from engaging in indirect financial transactions, in addition to direct financial transactions, involving entities or sub-entities on the CRL, subject to applicable exceptions. An indirect financial transaction includes circumstances in which a person participates in a transfer of funds without acting as the originator or ultimate beneficiary, where either the originator or ultimate beneficiary is a CRL entity or sub-entity.

In our view, this change may be particularly significant for financial intermediaries. OFAC’s revised guidance provides examples in which a U.S. bank processing a transaction between non-U.S. parties may engage in a prohibited indirect financial transaction where the originator or beneficiary is a CRL entity. OFAC has also amended numerous CACR general licenses that previously excluded only direct financial transactions with CRL entities to extend those exclusions to indirect financial transactions.

OFAC has also removed the authorization that previously permitted banking institutions subject to U.S. jurisdiction to process certain U-turn transactions involving Cuba or a Cuban national where the funds transfer originated and terminated outside the United States and neither the originator nor the beneficiary was a person subject to U.S. jurisdiction. Banking institutions subject to U.S. jurisdiction are now authorized to reject, rather than process, such transactions.

Additionally, OFAC has removed the authorization that permitted banking institutions subject to U.S. jurisdiction to open and maintain accounts solely in the name of Cuban nationals qualifying as independent private sector entrepreneurs for purposes of conducting certain authorized or exempt transactions. Unless separately authorized, banking institutions that maintained accounts pursuant to the former authorization must now block the relevant funds and accounts, and a specific license is required to unblock them. We note that the change does not eliminate all authorization for U.S. bank accounts held by Cuban nationals located in Cuba. Section 515.584(h) continues to authorize certain accounts used to receive U.S. payments connected to authorized or exempt transactions and remit those payments to Cuba.

Persons subject to U.S. jurisdiction are additionally no longer generally authorized under Section 515.564 to attend or organize professional meetings or conferences in Cuba. OFAC has adopted a limited wind-down authorization through October 30, 2026, for certain persons already in Cuba on September 30 under the former authorization and to permit the termination and refund of certain previously authorized travel arrangements.

Lastly, OFAC has narrowed authorizations for educational activities and removed the former authorization for group people-to-people educational travel. Certain educational activities remain authorized, subject to applicable requirements, and OFAC has adopted grandfathering provisions for certain educational and group people-to-people travel where the traveler completed at least one travel-related transaction before September 30, 2026.

Key takeaways

From our perspective, the September 30 measures represent a material tightening of the U.S. sanctions framework relating to Cuba. The changes are relevant not only to U.S. persons with Cuba-related activities but also to certain non-U.S. businesses and financial institutions. E.O. 14404 and the new CSR establish a separate sanctions framework permitting blocking sanctions against foreign persons determined to meet specified criteria, while foreign financial institutions may face restrictions on access to U.S. correspondent or payable-through accounts or blocking sanctions for certain significant transactions involving persons blocked pursuant to the Order.

For financial institutions, the amendments are particularly notable. The removal of the U-turn authorization restricts the ability of U.S. banking institutions to process certain Cuba-related payments between non-U.S. parties, while the extension of the CRL prohibition to indirect financial transactions may affect transactions in which a U.S. institution participates only as an intermediary. OFAC’s updated guidance states that a financial institution generally may rely on customer statements or information available in the ordinary course of business regarding whether a transaction is authorized unless it knows or has reason to know otherwise, while conducting due diligence commensurate with its risk profile and internal compliance procedures.

The travel-related amendments also warrant attention from companies, professional organizations, universities and other institutions with existing Cuba-related arrangements. Parties should assess whether planned travel remains authorized and, where relevant, whether the applicable wind-down or grandfathering provisions apply.

More broadly, businesses engaging in transactions involving Cuba should consider whether existing screening and payment controls appropriately address both the expanded CRL restrictions and the separate sanctions framework established by E.O. 14404 and the CSR. 

We are happy to discuss any of the topics above in further detail.