The U.S. Office of Foreign Assets Control (OFAC) has implemented stricter sanctions on Cuba, effective September 30. These measures expand the scope of restricted activities and target foreign entities operating in specific sectors of the Cuban economy.
The new sanctions, outlined in the Cuban Sanctions Regulations (CSR), are a response to Executive Order 14404 issued in May. They authorize OFAC to sanction Cuban and non-Cuban individuals and entities involved in sectors like energy, defense, and financial services, as well as those supporting the Cuban government or implicated in human rights abuses.
Expanded Restrictions and Their Impact
A key change is the extension of the Cuba Restricted List (CRL) prohibition to indirect transactions. This means any financial intermediary, including U.S. banks, could be liable if they process payments involving CRL entities, even if the transaction originates and ends outside the U.S.
The sanctions also eliminate the previous authorization for “U-turn” payments and prohibit U.S. banks from holding accounts for Cuban private entrepreneurs. These accounts must now be blocked and reported unless specifically authorized.
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New Cuba Sanctions Target Foreign Entities and Financial Transactions
Executive Order 14404, issued in May, targets foreign individuals and entities operating in specific sectors of the Cuban economy, including energy, defense, and financial services. The order authorizes the Office of Foreign Assets Control (OFAC) to add these individuals and entities to the Specially Designated Nationals (SDN) List, which has already occurred in some cases.
Foreign banks handling significant transactions for sanctioned persons risk losing access to U.S. correspondent accounts or being blocked themselves. General License 1 allows certain authorized transactions to continue. Financial institutions face increased risks due to the end of U-turn authorization and the indirect-transaction ban, requiring them to rely on customer statements and due diligence to ensure compliance.
Travel and Financial Implications
Travel restrictions have tightened, too. General licenses for attending professional meetings or conferences in Cuba are no longer valid. Educational travel now requires a U.S. sponsoring organization and an accompanying representative. Group people-to-people travel has been eliminated.
Compliance and Future Considerations
The wind-down period for existing travel arrangements ends on October 30. Companies, universities, and organizations with planned trips to Cuba should confirm their authorization status and understand the applicable wind-down or grandfathering provisions.
