U.S. ends Cuba-linked “U-turn” payment route, tightening settlement risk for maritime trade

The U.S. Treasury’s Office of Foreign Assets Control (OFAC) has tightened the Cuban Assets Control Regulations (CACR), effective September 30, 2026. The change is directly relevant to owners, charterers, traders, port agents, insurers and banks involved in Cuba-related shipping because it removes the long-standing authorization for certain “U-turn” funds transfers.

Previously, a bank subject to U.S. jurisdiction could process a transfer in which Cuba or a Cuban national had an interest where the payment both originated and terminated outside the United States, provided neither the originator nor beneficiary was a person subject to U.S. jurisdiction. OFAC has removed that authorization in 31 CFR §515.584(d). Such banks are now authorized only to reject—not block—those transfers. OFAC also removed the related authorization to unblock and return transfers that would previously have qualified under the U-turn general license.

The final rule also expands the CACR restriction on dealings with entities on the U.S. State Department’s Cuba Restricted List. It prohibits persons subject to U.S. jurisdiction from participating in indirect financial transactions where either the originator or ultimate beneficiary is a listed entity or subentity. OFAC describes an indirect transaction as one in which a person participates in a funds transfer without being the originator or ultimate beneficiary. The rule adds anti-evasion language and adjusts several general licenses accordingly.

**Why this matters:** The operational consequence is not an automatic prohibition of all Cuba-related seaborne trade. However, payment execution has become materially more restrictive where a transaction relies on a U.S.-jurisdiction bank, including a U.S. correspondent-bank leg. Freight, demurrage, bunker, agency, survey, claims, port-service and cargo-sale payments may now face rejection if they depend on the withdrawn U-turn route. Separately, transaction participants must assess whether any counterparty, ultimate recipient, port-service provider or other entity in the payment chain is on the Cuba Restricted List.

For maritime counterparties, the immediate priority is to map payment flows before fixing, loading, discharging or settling Cuba-connected business. Contract and claims teams should identify payment currencies, correspondent banks, payment instructions, named beneficiaries, assignment arrangements and reimbursement mechanisms. Screening should extend beyond the contractual counterparty to relevant payees and beneficial parties in the settlement chain. Rejected payments can create delay, default, cash-flow and documentation issues even where the underlying shipment is otherwise lawful. Parties should obtain sanctions and banking advice for transaction-specific questions; a commercial workaround should not be assumed to be compliant.