USA – WASHINGTON, DC Trends and Developments Contributed by: Stephanie L. Connor, Andrew K. McAllister, Matt Rosenbaum and Manny Levitt, Holland & Knight LLP
the EO raised immediate questions regarding how the new IEEPA sanctions would intersect with the long- standing US 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. EO 14404 authorises the imposition of blocking sanc - tions on foreign persons found to meet the following criteria: • Key economic sectors – EO 14404 authorises blocking sanctions on persons determined to oper - ate or have operated in the energy, defence and related material, metals and mining, financial ser - vices or security sectors of the Cuban economy, as well as any other sector that the Treasury Depart - ment may identify in consultation with the State Department. The US has employed similar sectoral sanctions in other sanctions programmes such as those with Russia and Iran. The EO does not auto - matically impose sanctions on all persons operat - ing 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 gov - ernment, 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 designa - tion of Grupo de Administración Empresarial SA (GAESA)’s executive president. Many such persons are already subject to blocking sanctions under the CACR. • Serious human rights abuse and corruption – Similar to other OFAC sanctions programmes, EO 14404 authorises 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 cor - ruption in Cuba. OFAC was already authorised 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 programmes, EO 14404 authorises sanc - tions on persons owned or controlled by persons blocked pursuant to the order, notwithstanding the fact that sanctions automatically apply to entities that are 50% or more owned by blocked persons, pursuant to OFAC’s long-standing 50 Percent Rule . In this case, however, the EO also authorises 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 programmes, EO 14404 authorises 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 per - sons, and it authorises 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 US sanctions by hiding funds with or acting through a family member. Notably, the EO has a carve-out indicating that its pro - hibitions “shall not apply to activities authorised by, and shall not affect the validity of, any license issued pursuant to” the CACR. On 7 May 2026, OFAC further clarified the EO’s carve-out with a broad Cuba-related GL 1, authorising all transactions prohibited by EO 14404 to the extent that they are authorised or exempt under the CACR. On 7 May 2026, the State Department issued the first designations under EO 14404, sanctioning GAESA (the Cuban military-run conglomerate estimated to control 40–70% of the Cuban economy), its execu - tive president, and Moa Nickel SA (a joint venture between Canada’s Sherritt International and a Cuban state-owned entity) for operating in the metals and mining sector. The State Department subsequently designated additional Cuba government ministries, including the Ministry of the Interior and several state- affiliated intelligence agencies, and a group of top Cuban government officials and their family members. On 11 June 2026, the State Department designated
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