On May 1, 2026 the White House announced a new executive order titled Imposing Sanctions On Those Responsible For Repression In Cuba And For Threats To United States National Security And Foreign Policy which asserts that the policies and actions of the Government of Cuba “continue to pose an unusual and extraordinary threat to U.S. national security and foreign policy.” Canadian companies with ties to Cuba should consider the impact of this executive order as it may put them in conflict with the compliance requirements of Canada’s Foreign Extraterritorial Measures (United States) Order, 1992 (“Cuba Order”) under the Foreign Extraterritorial Measures Act (“FEMA”).
New U.S. Sanctions Targeting Cuba
The new executive order imposes blocking sanctions and transaction prohibitions targeting a broad range of persons connected to the Cuban government as well as activities in a broad range of industries, including those in the energy, defense and related materiel, metals and mining, financial services, or security sector of the Cuban economy. All property and interests in property of designated persons that are in the United States, come within the United States, or come within the possession or control of U.S. persons are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in.
Critically, the executive order also authorizes the U.S. Secretary of the Treasury to impose sanctions on foreign financial institutions (“FFIs”) where the Secretary determines that the FFI[1] has conducted or facilitated any significant transaction for or on behalf of any person whose property or interests in property are blocked. Such sanctions may include (i) prohibiting, or imposing strict conditions on the maintenance of, correspondent accounts or payable-through accounts in the United States and (ii) blocking all property and interests in property that are in the United States, that come within the United States, or that come within the possession or control of any United States person, and provide that such property and interests in property may not be transferred, paid, exported, withdrawn, or otherwise dealt in.
In effect, Canadian persons – regardless of their nexus to the U.S. – may be subject to U.S. secondary sanctions for engaging in any activities with persons blocked pursuant to this executive order or operating in a sector designated by the order.
FEMA: Canada’s Blocking Statute
The obligations on Canadian individuals and entities under the Cuba Order issued pursuant to FEMA remain in force.
At a high level, the Cuba Order generally prohibits any Canadian corporation, and its directors, officers, managers and employees in a position of authority of a Canadian corporation, from complying with an extraterritorial measure of the United States related to trade with Cuba or with any directive, instruction, intimation of policy or other communication relating to such a measure that the Canadian corporation or director, officer, manager or employee has received from a person who is in a position to direct or influence the policies of the Canadian corporation in Canada. The Cuba Order also requires every Canadian corporation and every director and officer of a Canadian corporation to give notice to the Attorney General of Canada of any directive, instruction, intimation of policy or other communication relating to an extraterritorial measure of the United States in respect of any trade or commerce between Canada and Cuba.
In effect, the Cuba Order is designed to prohibit Canadians from complying with U.S. sanctions targeting Cuba. The potential maximum penalties for violating FEMA include a fine of $1,500,000 in the case of a corporation, and a fine of $150,000 or imprisonment of five years (or both) in the case of an individual.
Takeaway for Businesses
Any Canadian business with a touchpoint in Cuba, as well as the business’ directors, officers, and employees, should take note of the prohibitions set out in the new U.S. executive order as well as the Cuba Order and FEMA.
[1] The executive order defines “foreign financial institution” as any foreign entity that is engaged in the business of accepting deposits; making, granting, transferring, holding, or brokering loans or credits; purchasing or selling foreign exchange, securities, futures, or options; or procuring purchasers and sellers thereof, as principal or agent. It includes but is not limited to depository institutions; banks; savings banks; money services businesses; operators of credit card systems; trust companies; insurance companies; securities brokers and dealers; futures and options brokers and dealers; forward contract and foreign exchange merchants; securities and commodities exchanges; clearing corporations; investment companies; employee benefit plans; dealers in precious metals, stones, or jewels; and holding companies, affiliates, or subsidiaries of any of the foregoing. The term does not include the international financial institutions identified in 22 U.S.C. 262r(c)(2), the International Fund for Agricultural Development, the North American Development Bank, or any other international financial institution so notified by the Office of Foreign Assets Control.
[View source.]
