Overview
On September 29, 2026, effective September 30, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) issued a package of regulatory actions reorganizing multiple OFAC regulations, tightening the Cuba sanctions program, and incorporating existing authorities into the Iranian Transactions and Sanctions Regulations (31 C.F.R. Part 560) (“ITSR”). The Cuba measures include the new Cuba Sanctions Regulations (31 C.F.R. Part 516) (“CSR”), amendments to the Cuban Assets Control Regulations (31 C.F.R. Part 515) (“CACR”), new and revised FAQs, and an OFAC Alert.
New Cuba Sanctions Regulations
OFAC issued the CSR to implement Executive Order (“E.O.”) 14404 of May 1, 2026, which established a new Cuba-related sanctions authority by authorizing the blocking of persons determined to operate in specified sectors of the Cuban economy, support the Government of Cuba or designated persons, or engage in other sanctionable conduct, and by authorizing the imposition of secondary sanctions on certain non-U.S. persons, including foreign financial institutions that conduct or facilitate significant transactions for persons blocked under the order.
The CSR addresses blocked property, transfers, setoffs, ordinarily incident transactions, and entities owned by blocked persons. It also contains general licenses for specified legal, medical, governmental, international-organization, non-governmental, and humanitarian activities. OFAC issued the CSR in an abbreviated form and expects to supplement it with additional guidance and authorizations.
The CSR and the CACR are separate regulatory regimes, so an authorization under one does not permit conduct barred by the other unless it expressly applies to both. General License 1, however, partially coordinates the programs by authorizing conduct prohibited under the CSR when that conduct is otherwise authorized or exempt under the CACR, including certain family remittances and deliveries of food, medicine, or medical devices.
Key takeaways: The CSR implements the authorities already established by E.O. 14404 rather than creating new Cuba-related prohibitions. Cuba-related activity should nevertheless be analyzed separately under both the CSR and the CACR. Non-U.S. companies and financial institutions should continue to identify dealings with persons blocked under E.O. 14404 because significant transactions for such persons may create sanctions exposure.
Expanded Cuba Restricted List Prohibition
OFAC expanded CACR Section 515.209 so that persons subject to U.S. jurisdiction are also prohibited from engaging in indirect financial transactions with entities and subentities named on the State Department’s Cuba Restricted List (“CRL”). For CACR purposes, a transaction is direct when a person subject to U.S. jurisdiction sends or receives funds to or from a CRL entity. A transaction is indirect when the person instead serves as an intermediary in a transfer whose originator or ultimate beneficiary is on the CRL.
OFAC cautions in FAQ 735 that this “indirect financial transaction” concept is specific to the CACR and does not govern other sanctions programs. OFAC correspondingly expanded the language of certain CACR general licenses to also include CRL indirect transactions. OFAC’s guidance illustrates the restriction through examples involving either a U.S. correspondent bank routing a payment originating from a CRL entity or a U.S. banking institution processing a non-U.S. person’s payment to a CRL entity. OFAC also broadened the criteria for adding entities and subentities to the CRL. Importantly, the restrictions remain name-based, meaning that a company not specifically listed in the CRL does not become subject to restrictions by virtue of its ownership.
Key takeaways: Due diligence should identify both payment originators and ultimate beneficiaries, including transactions handled only as an intermediary. Companies should also distinguish the CRL’s name-based restrictions from ownership-based blocking rules under other OFAC programs.
Additional Restrictions on Cuba-Related Banking and Travel
OFAC also narrowed several banking and travel-related authorizations under the CACR:
- U-turn transactions are no longer authorized: U.S. banking institutions now need to reject, rather than block, Cuba-related transfers originating and ending outside of the U.S.
- Accounts for private-sector entrepreneurs are no longer authorized: Unless separately authorized, affected accounts must be blocked and reported, and unblocking requires a specific license. A narrower authorization remains for accounts of other Cuban nationals in Cuba used to receive and remit payments from authorized or exempt activity.
- Professional meetings and conferences are now restricted: The general license for attending or organizing professional meetings and conferences is no longer available, although qualifying professional research remains authorized. Persons already in Cuba under the former authorization on September 30, 2026 may continue covered transactions through October 30, 2026 if they depart by then. Cancellation and refund transactions are also authorized through that date.
- Educational travel is now also restricted: OFAC eliminated group people-to-people educational travel and limited other categories of educational travel to those organized by certain accredited U.S. degree-granting institutions or to specific educational exchanges.
- Grandfathering and licensing: Previously authorized educational or group people-to-people travel may continue if the traveler completed at least one qualifying travel transaction before September 30, 2026. OFAC may also consider specific license applications for travel not covered by a general license.
Key takeaways: The elimination of the U-turn authorization will affect U.S. financial institutions that would need to adjust their controls for Cuba-related payments. Separately, the narrowed travel authorizations mean that travelling to Cuba under existing general licenses widely used by U.S. persons has become more difficult and companies, universities, travel providers, and travelers should confirm whether planned travel remains authorized or qualifies for grandfathering.
Iran-Related Amendments
OFAC separately revised the ITSR to incorporate E.O. 13902 of January 10, 2020. The amendments codify existing E.O. 13902 authorities rather than create a new Iran sanctions program. Specifically, the incorporated authorities permit blocking persons that operate in specified Iranian economic sectors, engage in certain significant sector-related transactions, support persons blocked under the order, or are owned or controlled by, or act for or on behalf of, such persons. The rule also updates the applicable definition of “Iran” and incorporates exemptions for agricultural commodities, food, medicine, medical devices, and specified official UN activities.
Key takeaways: Iran compliance materials should cite the revised ITSR and account for the incorporated sectoral blocking criteria and exemptions, even though the rule principally codifies existing authorities.
Removal of Duplicative Provisions and Regulatory Reorganization
Finally, OFAC removed duplicative penalty provisions across numerous sanctions programs and consolidated the information in the new Sanctions Penalties Regulations in 31 C.F.R. Part 505. Part 505 addresses statutory penalties, pre-penalty notices, settlements, penalty impositions, administrative collection, referrals to the Department of Justice, and findings of violation.
OFAC also moved provisions concerning records and reports, procedures, and delegations of authority into expanded “General Provisions” parts under the sanctions programs. The rule eliminates more than 100 duplicative subparts, updates cross-references and authority citations, and in certain cases directs readers to more complete or current penalty information.
Key takeaways: The rule does not eliminate the underlying recordkeeping, reporting, procedural, or penalties requirements in the sanctions programs, but generally relocates the information. Parties reviewing enforcement exposure under an affected sanctions program should consult both the substantive program regulations and Part 505.
For additional information regarding these developments or U.S. economic sanctions compliance generally, please contact a member of Steptoe’s Economic Sanctions team.
