BACKGROUND
Since 1962, the United States has maintained a comprehensive country-wide embargo against Cuba, which includes broad trade and financial restrictions, export controls, and other measures that can impact activities of non-US persons.
The sanctions on Cuba were further strengthened through the issuance of Executive Order 14404 (EO 14404) on May 1, 2026, significantly expanding the sanctions risk to non-US persons. With respect to Venezuela, the US has implemented an extensive sanctions framework—developed by presidents from both political parties—targeting the government of Venezuela, seeking to promote democratic governance, address corruption and human rights violations, and hold accountable the individuals and entities determined to be responsible for undermining democratic institutions.
These measures have also sought to restrict financial resources available to the Venezuelan government and other sanctioned entities, including through sanctions targeting the financial and energy sectors, while advancing broader US national security and foreign policy objectives.
By contrast, the EU has consistently rejected the use of broad economic sanctions against Cuba. The Council of the European Union’s (Council’s) general sanctions guidelines call for measures proportionate to their objectives and targeted at those responsible for the relevant policies or actions, rather than measures that may adversely affect civilian population.[1] Through the adoption of the EU Blocking Statute, the EU has also sought to shield EU operators from the effects of specified extraterritorial third-country sanctions, notably certain US sanctions relating to Cuba.
With respect to Venezuela, consistent with its general sanctions approach, the EU has adopted targeted measures consisting primarily of asset freezes, travel bans, and restrictions on the supply of arms and equipment that may be used for internal repression. The EU’s stated priority has been to respond to the deterioration of democratic standards and human rights violations through targeted autonomous sanctions that seek to influence political decisionmakers while avoiding comprehensive economic harm, in line with the principles governing its Common Foreign and Security Policy.[2]
The divergence reflects fundamentally different reliance on economic sanctions as foreign policy tools. Where the US relies on broad sanctions applicable to both US and non-US persons, the EU has generally favored targeted measures combined with diplomatic efforts. In addition, the EU’s more targeted use of economic sanctions is shaped by the requirement, as a rule, for unanimity among EU member states and by a general reluctance to give effect to extraterritorial sanctions.
ABSENCE OF SPECIFIC EU SANCTIONS TARGETING CUBA
The US trade embargo is principally implemented through the Cuban Assets Control Regulations (CACR)[3] and applies to persons “subject to US jurisdiction,” which has been defined to mean (i) US citizens and permanent residents, (ii) any person physically located within the US, (iii) entities organized under the laws of the US (including foreign branches), and (iv) foreign entities owned or controlled by (i) or (iii).[4]
The CACR contains broad prohibitions on transactions involving Cuba or Cuban nationals without authorization from the Office of Foreign Assets Control (OFAC).
With the Export Administration Regulations, the CACR restricts engagement with Cuba and can disrupt or create exposure for transactions involving non-US persons. Relevant US touchpoints can include but are not limited to US-dollar payments that clear through US financial institutions, US-origin goods, software, or technology, and involvement of US employees.
On May 1, 2026, the US expanded its Cuba sanctions framework through EO 14404, as discussed in our LawFlash, New Executive Order Threatens Sanctions Against Non-US Persons Doing Business with Cuba, authorizing sanctions against foreign persons involved in specified Cuba-related activities, as well as sanctions targeting foreign financial institutions that conduct or facilitate certain significant transactions involving persons blocked under EO 14404.[5]
OFAC has since made designations under EO 14404, including most recently on October 15.[6] To date, 35 individuals and 63 entities are listed under EO 14404.
Separately, effective September 30, 2026, OFAC amended the CACR to:
- Expand the Cuba Restricted List (CRL) prohibition to cover indirect financial transactions by persons subject to US jurisdiction, including participation as an intermediary in funds transfers where the originator or ultimate beneficiary is a CRL-listed entity or sub-entity, subject to applicable exceptions and authorizations;
- Eliminate the general authorization for banking institutions subject to US jurisdiction to process certain Cuba-related “U-turn” transactions, replacing it with an authorization to reject such transactions;
- Remove the general authorization permitting banking institutions subject to US jurisdiction to open and maintain certain accounts for Cuban nationals qualifying as independent private-sector entrepreneurs; and
- Restrict certain travel-related authorizations, including by eliminating the general authorization for attendance at or organization of professional meetings and conferences in Cuba and the general authorization for group people-to-people educational travel, subject to specified transitional provisions.[7]
These changes are particularly relevant to EU operators whose transactions depend on US banks or other US-jurisdictional intermediaries, and to groups whose US personnel travel to Cuba for professional meetings.
The EU has adopted a profoundly different strategy with respect to Cuba. In particular, EU policy has generally favored political dialogue, economic engagement, and support for gradual reform, a position reflected in the Political Dialogue and Cooperation Agreement (PDCA) between the EU and Cuba, which entered into provisional application in 2017.[8]
However, EU-Cuba relations have since turned increasingly strained following the Cuban authorities’ crackdown on the nationwide protests of July 2021, with the EU Parliament consistently condemning human rights violations and advocating for stronger EU action.[9] On June 18, 2026, the EU Parliament called on the EU member states for “targeted measures” against Cuban senior officials, including President Miguel Díaz-Canel, and a suspension of the PDCA in light of the systematic repression carried out by the Cuban regime.[10]
The EU’s position is also rooted in its longstanding opposition to the extraterritorial application of US sanctions. Since the adoption of the Helms-Burton Act in 1996, which significantly strengthened the US embargo against Cuba and extended its effects beyond US borders, the EU has consistently objected to measures that seek to regulate the conduct of non-US persons outside US jurisdiction, including through the adoption of and reliance on the EU Blocking Statute, and EU member states’ recurring support for the annual United Nations General Assembly resolution calling for an end to the US embargo in light of its adverse humanitarian and economic effects on Cuba.[11]
SHIELDING EU OPERATORS FROM US-CUBA SANCTIONS THROUGH EU BLOCKING STATUTE
The EU Blocking Statute gives effect to the EU’s rejection of the extraterritorial application of certain US sanctions targeting Cuba. Adopted in 1996 in response to the Helms-Burton Act, it prohibits compliance with specific US sanctions unless authorized by the European Commission (Commission), prevents recognition of certain foreign judgments, and provides mechanisms to notify the Commission and recover damages.[12]
For Cuba-related activities, the key issue is whether a relevant US requirement or prohibition falls within Article 5 because it is based on, or results directly or indirectly from, legislation specified in the Annex to the EU Blocking Statute (Annex). As the Commission may amend the Annex by delegated acts, whether a particular US measure is covered depends on the version of the Annex in force at the relevant time.[13] The Annex currently identifies, among other US-Cuba measures, 31 C.F.R. Part 515, subparts B, E, and G, by reference to the July 1, 1995 edition.[14]
This wording is significant following the September 30, 2026 CACR amendments: key changes were made to sections 515.209 and 515.584, in subparts B and E, respectively, but the Annex’s dated reference means that EU operators should not assume without analysis that every post-1995 CACR amendment is automatically within Article 5. Conversely, EO 14404 and the regulations in 31 C.F.R. Part 516 are not currently listed in the Annex.
Compliance with obligations arising solely under Part 516 of EO 14404 therefore raises different EU Blocking Statute questions from compliance with CACR-based restrictions. Where one transaction implicates both regimes, operators should identify and document the precise US legal basis for any proposed action.
The EU Blocking Statute also provides a limited authorization mechanism under which the Commission may permit compliance with listed US sanctions where noncompliance would seriously prejudice the interests of the relevant operator or the EU.[15] The Commission has granted such authorizations in a number of Iran-related cases involving Clearstream Banking AG, demonstrating that the mechanism can be used in practice where the relevant criteria are satisfied.[16]
In Bank Melli Iran v. Telekom Deutschland, the Court of Justice of the European Union (CJEU) held that Article 5 may prohibit compliance with US sanctions even in the absence of an enforcement action or specific instruction from US authorities. The CJEU also held that EU operators may need to demonstrate that business decisions were based on legitimate commercial reasons rather than merely prohibited compliance with listed US sanctions.[17]
In practice, EU operators doing business with Cuba must separate at least three questions: (i) whether a transaction is prohibited or otherwise restricted because a US jurisdictional nexus brings the CACR or export controls into play; (ii) whether a non-US person or foreign financial institution would violate primary sanctions or face secondary-sanctions risk under Part 516 of EO 14404; and (iii) whether a contemplated response to US restrictions could, by itself, engage Article 5 of the EU Blocking Statute.
The September 30, 2026 changes render this mapping of relevant legal bases even more important, particularly for payment chains involving US banks and CRL entities.
EVOLVING EU RESTRICTIVE MEASURES TARGETING VENEZUELA
The US first began imposing modern economic sanctions against Venezuela in March 2015, progressively expanding measures from targeted designations to broader financial and economic restrictions combining blocking sanctions, sectoral restrictions, and export controls, affecting key sectors of the Venezuelan economy, particularly the energy sector. This culminated with full blocking sanctions on the government of Venezuela, imposed on August 5, 2019.
On January 3, 2026, things began to shift with the capture of Nicolás Maduro in Caracas. Just weeks later, the US began to ease sanctions on Venezuela, specifically on oil trading. Since then, OFAC has issued 17 general licenses further easing certain sanctions on Venezuela.
By contrast, the EU adopted only country-specific restrictive measures described as “gradual, targeted, flexible, and reversible” in November 2017, following a period of escalating political and institutional crisis, which the Council described as deterioration of democracy, the rule of law, and human rights, including actions undermining the National Assembly, and repression of the political opposition and civil society (Council Decision (CFSP) 2017/2074[18] and Council Regulation (EU) 2017/2063).[19]
The EU regime remains significantly narrower than the US framework and does not prohibit EU operators from engaging in ordinary commercial transactions with Venezuelan counterparties. It focuses instead on an arms embargo,[20] restrictions on equipment, technology, and software that may be used for internal repression or communications surveillance,[21] and targeted asset-freeze and travel-restriction measures against designated individuals that are responsible for serious human rights violations, repression of civil society and democratic opposition, or actions undermining democracy and the rule of law.[22]
As of October 2026, 69 individuals remain subject to EU asset-freeze and travel-restriction measures, compared with 186 individuals currently listed under Venezuela-related OFAC sanctions programs.[23]
The timing and design of the EU measures reflect an approach that markedly differs from that of the US. While the EU broadly shares US concerns regarding democracy, human rights, and the rule of law in Venezuela, it has deliberately adopted a different sanctions model and elected not to impose broader sustained economic pressure on the country.
This approach reflects the EU’s longstanding preference for more limited restrictive measures aimed at influencing the conduct of political leaders, while limiting unintended consequences for the civilian population and preserving legitimate commercial relations wherever possible. This approach has also been applied in the context of other EU sanctions regimes, including those targeting Zimbabwe and Myanmar.
Consequently, while both the EU and the US seek to encourage the transition to democracy and accountability, the US has generally sought to deploy broader political and economic pressure than the EU, with the potential for US restrictions to affect activities that remain permissible under EU law. The EU’s response to US intervention in Venezuela in January 2026 was to reemphasize common priorities while emphasizing a peaceful and Venezuelan-led restoration of democracy in compliance with international law and the UN Charter,[24] and maintaining its restrictive measures.
At present, the Council has extended the sanctions regime until January 10, 2027, and the European Parliament has urged that sanctions remain in place until Venezuela demonstrates verifiable democratic progress.[25]
This contrasts with the current US approach of calibrated relaxation of certain restrictions through a series of OFAC general licenses. In particular, OFAC has issued and subsequently amended a series of general licenses authorizing, subject to applicable conditions and limitations, transactions involving Venezuela’s oil, gas, petrochemical, and mining sectors, including the production, sale, exportation, and transportation of Venezuelan-origin commodities; the provision of goods and services supporting energy and mining operations; certain transactions involving Petróleos de Venezuela, S.A. and other Venezuelan state-owned entities; and certain new investment-related activities and financial transactions.[26]
These measures do not amount to a general lifting of US sanctions against Venezuela but represent a significant licensing-based easing of restrictions intended to permit defined categories of commercial activity while the broader US sanctions framework remains in place for now.
HOW TO NAVIGATE YOUR BUSINESS’S EXPOSURE
For EU operators, Venezuela principally requires compliance with the parallel application of EU and US sanctions-oriented frameworks, while Cuba presents additional and particularly acute conflict-of-laws issues arising under the EU Blocking Statute. EU operators may face increasingly overlapping and conflicting legal obligations: complying with certain US sanctions may expose them to liability under EU law (where the relevant US legislation is covered by the Annex to Regulation 2271/96 and no Commission authorization applies), while failing to comply may create exposure under US law.
Conversely, noncompliance may create US sanctions exposure. The EU Blocking Statute does not eliminate US enforcement risks or the commercial consequences faced by operators with a significant US nexus.
Operators doing business in or with Cuba and Venezuela should undertake a transaction-specific assessment of both EU and US sanctions exposure, including:
- Identifying the specific EU and US legal bases applicable to a transaction, including whether Cuba-related restrictions arise under the CACR, Helms-Burton–related authorities, EO 14404, or other instruments.
- Assessing whether the EU Blocking Statute applies, including the exact US legal basis, the Annex’s dated reference to specified Part 515 subparts, and whether an Article 5 conflict may arise.
- Screening counterparties, ownership structures, goods, technology, payment flows, correspondent and intermediary banks, and other US jurisdictional touchpoints.
- Documenting the legal basis and independent commercial reasons for significant Cuba-related business decisions, particularly where different US authorities may have differing treatment under the EU Blocking Statute.
- Monitoring developments under both EU and US regimes, especially with respect to Part 516 of EO 14404, the CACR, Venezuela-related general licenses, and any future changes to the EU Blocking Statute or its Annex.
Law clerk Octavie Jacquet contributed to this Insight.
