New IEEPA Executive Order Expands Cuba Sanctions Risks

President Donald Trump on May 1, 2026, issued Executive Order (EO) 14404 to authorize additional sanctions with respect to Cuba pursuant to the International Emergency Economic Powers Act (IEEPA), 50 U.S.C. 1701 et seq. – including secondary sanctions for foreign financial institutions (FFIs) that conduct or facilitate significant transactions for or on behalf of any person designated pursuant to the EO. The EO raised immediate questions regarding how the IEEPA sanctions would intersect with the long-standing U.S. embargo on Cuba, which is premised on the Trading with the Enemies Act of 1917 (TWEA) and a patchwork of other laws, as implemented by the Cuban Assets Control Regulations (CACR), 31 C.F.R. Part 515.

Blocking Sanctions

EO 14404 authorizes the U.S. Department of the Treasury and U.S. Department of State to impose blocking sanctions on foreign persons determined to meet the following criteria:

• Key Economic Sectors. EO 14404 authorizes blocking sanctions on persons determined to operate or have operated in the energy, defense and related material, metals and mining, financial services or security sectors of the Cuban economy, as well as any other sector that the Treasury Department may identify in consultation with the State Department. The U.S. has employed similar sectoral sanctions in other sanctions programs such as those with Russia and Iran. The EO does not automatically impose sanctions on all persons operating in the specified sectors but is intended to signal the elevated sanctions risks to foreign companies operating in such sectors.
• Cuban Government Entities. The EO also targets entities owned and controlled by the Cuban government, as well as those who act or purport to act on the Cuban government's behalf, provide it with material assistance, sponsorship, support, goods and services, or serve as leaders and officials, as demonstrated by the State Department's designation of Grupo de Administración Empresarial S.A.'s (GAESA) executive president. Many such persons are already subject to blocking sanctions under the CACR.
• Serious Human Rights Abuse and Corruption. Similar to other Office of Foreign Assets Control (OFAC) sanctions programs, EO 14404 authorizes the imposition of sanctions on persons responsible for or complicit in, or who have directly or indirectly engaged or attempted to engage in, serious human rights abuse or corruption in Cuba. OFAC was already authorized to impose such sanctions under the Global Magnitsky sanctions, a targeted authority promulgated in the first Trump Administration to target bad actors from any foreign jurisdiction.
• Ownership and Control. As with most other IEEPA sanctions programs, EO 14404 authorizes sanctions on persons owned or controlled by persons blocked pursuant to the order, notwithstanding the fact that sanctions apply automatically to entities owned 50 percent or more by blocked persons pursuant to OFAC's long-standing 50 Percent Rule. In this case, however, the EO also authorizes sanctions up the chain, targeting persons who own or control, directly or indirectly, persons blocked pursuant to the order.
• Other Categories. As in other IEEPA sanctions programs, EO 14404 authorizes sanctions on persons determined to have provided material assistance or support to persons blocked under the EO, as well as those who act for or on behalf of such persons. The EO targets leaders, officials, senior executives or board members of such persons, and it authorizes the imposition of sanctions on the adult family members of persons designated pursuant to the EO – a mechanism designed to ensure that sanctioned persons cannot evade U.S. sanctions by hiding funds with or acting through a family member.

Notably, the EO has a carve-out indicating that its prohibitions "shall not apply to activities authorized by, and shall not affect the validity of, any license issued pursuant to" the CACR. On May 7, 2026, OFAC further clarified the EO's carve-out with a broad Cuba-related General License (GL) 1, authorizing all transactions prohibited by EO 14404 to the extent that they are authorized or exempt under the CACR.

Secondary Sanctions

The EO authorizes the Treasury Department, in consultation with the State Department, to impose sanctions on FFIs that conduct or facilitate significant transactions or transactions for or on behalf of persons blocked under the new EO, even unknowingly. The Treasury Department may prohibit or restrict correspondent or payable-through accounts in the U.S. for such institutions or, in more serious cases, block the institution itself.

Although the EO does not define the term "significant," OFAC has articulated a multifactor "totality of the facts and circumstances" test for evaluating whether a transaction is significant in other sanctions programs. Such factors include 1) the size, number and frequency of the transaction(s), 2) nature of the transaction(s), 3) level of awareness of management and whether the transactions are part of a pattern of conduct, 4) nexus of the transaction(s) to sanctioned persons or activities, 5) whether the transaction(s) involve deceptive practices, 6) the impact of the transaction(s) on U.S. national security objectives and 7) such other factors that OFAC deems relevant.

Moreover, OFAC has long held that foreign persons do not face the risk of secondary sanctions for engaging in activities that a U.S. person would be authorized to undertake. This is supported by the EO 14404 carve-out indicating that secondary sanctions "shall not apply to activities authorized by, and shall not affect the validity of, any license issued pursuant to" the CACR, as well as OFAC's May 7, 2026, clarification via GL 1, which authorizes all transactions prohibited by EO 14404 that are authorized or exempt under the CACR.

OFAC also issued guidance indicating that the U.S. government does not intend to target foreign persons, including FFIs, for winding down activities involving GAESA or its majority-owned entities through June 5, 2026.

Additional Context

The fact sheet accompanying the EO frames the measure as part of a broader effort to hold the Cuban regime and its supporters accountable for repression, corruption, human rights abuses, support for hostile actors and activities viewed by the administration as threatening U.S. national security and foreign policy, advancing many of the objectives articulated in the administration's National Security Presidential Memorandum (NSPM) 5 (June 30, 2025).

The fact sheet further suggests that the administration views the expansion of the Cuba sanctions through a broader geopolitical lens meant to address Cuba's support for hostile foreign actors, terrorism and regional instability. This may foreshadow aggressive implementation, including designations targeting not only Cuban state actors, but also commercial counterparties, intermediaries and service providers in third countries viewed as enabling Cuban government interests.

EO 14404 is the latest example of the Trump Administration's heavy reliance on IEEPA to achieve its foreign policy and national security goals. A prior attempt to impose secondary tariffs pursuant to IEEPA on companies that sell or provide oil to Cuba was thwarted after the U.S. Supreme Court earlier this year ruled that such tariffs exceed the authority bestowed on the president by IEEPA. (For more information, see Holland & Knight's previous alerts, "New Executive Order Opens Door to Tariffs on Countries Selling or Supplying Oil to Cuba," February 2, 2026, and "Supreme Court Strikes Down IEEPA Tariffs: What Importers Need to Know Now," February 20, 2026.) Although the U.S. government revoked the Cuba secondary tariffs after the Supreme Court's decision, the national emergency declared in January 2026 remained in place and formed the basis for the sanctions in EO 14404.

The new IEEPA sanctions are layered into a complex and comprehensive regulatory framework with respect to Cuba, including sanctions mandated by various congressional acts, restrictions tied to the Helms-Burton Act and related statutes, export-control restrictions under the Export Administration Regulations and other agency-administered limitations such as the State Department's Cuba Restricted List and Cuba Prohibited Accommodations List. These broad and wide-ranging restrictions are subject to a significant number of narrowly defined exemptions, authorizations and carve-outs. The new EO does not displace those measures but rather adds an additional layer of complexity and risk.

Holland & Knight Can Help

Holland & Knight continues to monitor developments regarding Cuba sanctions. If you have questions about the potential impact to your business, please contact the authors of this alert or another member of the Cuba Strategic Advisory Team, Financial Services Regulatory Team or International Trade Group.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.