How OFAC’s Sept. 30 Changes Narrow Banking and Financial Access
This explainer was put together by CEDA with expert input from Dr. William LeoGrande, Professor Emeritus of Government at American University, co-author of Back Channel to Cuba: The Hidden History of Negotiations between Washington and Havana, and a leading expert on U.S.-Cuba relations.
Overview
On Sept. 30, 2026, the U.S. Treasury Department tightened sanctions on Cuba in two key ways. First, it details the enforcement rules for Executive Order 14404, issued on May 1, 2026, that allows Washington to sanction foreign banks and companies for doing business with Cuba. Second, it reinstated a set of older, first-Trump-term restrictions that had been relaxed under President Biden, including a ban on U.S. banks holding accounts for independent Cuban entrepreneurs and new limits on travel and banking. In practice, these adjustments make it harder for money, goods, and people to move between the US and Cuba by:
Increasing the compliance cost of transactions with Cuba,
Augmenting the risk that US or international banks will reject transactions due to exposure to sanctions,
Closing off direct U.S. banking access for the private sector, specifically via the entrepreneur-account ban, removing one of the only formal channels that existed, and
Narrowing formal travel channels for people.
The Details
Effective Sept. 30, 2026, the Treasury Department's Office of Foreign Assets Control (OFAC) issued new regulations to operationalize Executive Order 14404 of May 1, 2026 through the creation of a new Cuba Sanctions Regulations (CSR) section of the Code of Federal Regulations.
Additionally, OFAC amended the Cuban Assets Control Regulations (CACR), effective Sept. 30, 2026. These changes prohibit “indirect” financial transactions with those on the Cuba restricted entities list, eliminate the general license for U-turn transactions, and change several travel general licenses and licenses allowing the Cuban private sector to bank with U.S. financial institutions.
OFAC also issued a formal alert warning of “Expanded Sanctions Against Cuba.”
NEW Track 1 — Implementing E.O. 14404: The new Cuba Sanctions Regulations (31 CFR 516) lay out the implementation of “secondary sanctions”—the authority, created with the May 1 E.O. 14404, for Washington to penalize foreign banks and companies for Cuba-linked dealings, even when no U.S. person or company is involved. They also carve out general licenses for humanitarian aid, agriculture, medicine, education, and democracy-support work.
ROLLBACK Track 2 — Reimposing CACR restrictions: Separately, OFAC revised the existing Cuban Assets Control Regulations (31 CFR 515) to reinstate restrictions that were imposed during the first Trump administration and later relaxed under the Biden administration. It also adds for the first time new requirements for indirect Cuba Restricted List (CRL) transactions.
CRL transactions. Indirect, not just direct, dealings with Cuba Restricted List entities are now barred.
U-turn banking. U.S. banks may no longer process, but must reject, transfers between foreign and Cuban parties that route through the U.S. financial system.
Entrepreneur banking. U.S. banks can no longer open or hold accounts for independent Cuban entrepreneurs; existing accounts must be blocked absent a specific license.
Travel. Group people-to-people educational travel and travel for professional meetings/conferences in Cuba lose their general license, and academic travel sponsored by degree-granting institutions is severely restricted.
Sanctions in Practice: Who Is Affected and How
Cuban private sector
The new rules cut Cuba’s private businesses off from the U.S. financial system as the Cuban private sector is increasingly a lifeline for Cubans and the only alternative to Cuba’s government. U.S. banks are no longer permitted to open and maintain accounts for Cuban independent private sector entrepreneurs. The U-turn ban shuts down a major route Cuban entrepreneurs had for moving money through foreign banks, and it lands while the banking sector and financiers are already reluctant to touch anything Cuba-related. Foreign banks face additional pressure on top of that reluctance: the OFAC Alert accompanying the new E.O. 14404 regulations explicitly warned international financial institutions—including those with no U-turn exposure at all—that doing business with a Cuban entity sanctioned under E.O. 14404 could itself trigger U.S. sanctions. With foreign banks already handling most of the private sector’s international payments, the combination of a CACR squeeze on U-turn transactions with the E.O. 14404 secondary-sanctions warning is likely to push compliance tighter still, creating new friction for the food, fuel, and other essential imports the private sector underpins.
The entrepreneur-banking ban hits a smaller number of businesses directly, as a limited number of Cuban micro, small, and medium-sized enterprises (MSMEs, or Mipymes in Spanish) were given access to U.S. banks under a Biden-era authorization in May 2024. Cuban MIPYMES have been expanding over the last few years, becoming a major lifeline for Cubans as the economic situation deteriorates. The ban also directly undercuts Havana’s June 2026 reforms—176 proposed measures, some of which are meant to expand private sector access to finance. Furthermore, the State Department has been quietly revoking visas for Cuban entrepreneurs.
Foreign and U.S. companies
The new CRL indirect-transaction ban exposes U.S. persons to civil fines or criminal prosecution if they engage in an indirect transaction with a designated Cuban entity. The risk to foreign companies still largely falls under the E.O. 14404 secondary sanctions implementation. U.S. agricultural exporters are largely insulated by separate authorization under the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA).
The CACR provisions hit U.S. academic institutions running exchange programs due to the narrowed educational-travel license on top of the State Department’s existing Level 2 travel advisory. Organizations that run people-to-people educational travel are likely to adapt as they did the last time this license was eliminated during President Trump's first term by shifting their programming to qualify under the separate Support for the Cuban People license category instead.
Cuban Americans
The CACR revisions do less to limit Cuban Americans’ own ability to send support than they might first appear, as most of that financial support has historically run through informal channels these changes do not touch. For example, Cuban Americans have been a key source of seed capital for private Cuban businesses, largely through remittances and informal transfers rather than formal, licensed investment since investing in a Cuban business legally has long required a specific OFAC license.
Cuba's government only recently finalized a law letting Cubans living abroad own businesses outright on the island, after years of false starts. The entrepreneur-banking ban closes one of the few formal mechanisms that existed for a Cuba-based business itself to receive and hold funds in a U.S. account—though few businesses used that mechanism even when it was available. There’s no data yet to measure whether Cuba’s private sector reforms materialized in greater investment, since the ownership law is only weeks old, but the scale of existing Cuban American financial ties is worth considering: remittances to Cuba have run $1.5-2.5 billion annually in recent years, most of it moving informally rather than through banks, and have long served as family support and, increasingly, informal capital for private businesses in the absence of any formal investment pathway. While these CACR revisions do not add new restrictions on remittances themselves, they close formal pathways for investment that had just opened up to the Cuban diaspora.
Cuban civil society
The narrowing of educational exchange licenses and the elimination of the professional meetings/conferences license reduce the legal channels for U.S. university programs, researchers, and civil society organizations to engage with Cuban counterparts. Programs that don’t fit the narrower remaining categories—noncommercial research by accredited institutions, or accompanied exchanges under a sponsoring organization—are no longer able to operate, shrinking one of the last remaining avenues of sustained person-to-person contact between the US and Cuba.
Humanitarian assistance
Technically, humanitarian aid is protected under the new general licenses in the Cuba Sanctions Regulations. However, the main constraint on humanitarian aid has never been legal authorization; it's finding a bank willing to process the payment or a shipper willing to carry the cargo at all. The secondary sanctions imposed through E.O. 14404 have already made that worse, and nothing in the Sept. 30 changes addresses it. A clearer legal pathway does little good for humanitarian organizations if the institutions that actually move money and goods keep suspending operations in Cuba.
Sanctions in Context: The Trump Administration’s Approach
The Sept. 30 CACR amendments and the operationalization of E.O. 14404 contribute to the Trump administration’s increasingly escalatory rhetoric and approach toward the island. A State Department spokesperson alleged the changes were meant to close loopholes Cuban authorities had used for sanctions evasion and to fund what the department called subversive and military activities. Cuba’s President Miguel Díaz-Canel countered publicly that targeting the private sector exposed the measures as aimed at ordinary Cubans, not just the government, calling them an attempt to inflict suffering on the Cuban people and obstruct the reforms already underway.
The banking change also breaks from the administration’s own prior approach. Until now, the Trump administration has maintained a policy of supporting U.S.-Cuba economic ties with the Cuban private sector, including permitting U.S. oil sales to private entities while barring sales to the state. The new policies narrow the Cuban private sector’s access to the U.S. financial system in two different ways: the entrepreneur-account ban cuts off direct U.S. bank accounts for Cuban entrepreneurs, while the U-turn ban cuts off a separate channel, specifically the ability to use non-U.S. banks for dollar-denominated transactions that clear through a U.S. correspondent bank along the way. This comes at a time when the private sector is attempting to establish viable alternative economic channels away from Cuba’s government.
Prior to these new policies, the Cuban private sector had already struggled to access financing: banks and shippers tend to overcomply, avoiding transactions that are technically legal for fear of inadvertently triggering a sanctions violation. As the country experiences a dire humanitarian situation, the Trump administration’s May 1 executive order and OFAC’s Sept. 30 changes threaten the Cuban private sector’s ability to be a critical source of goods for ordinary Cubans as state distribution falters.
