Category: Laws and Regulations

Trading with the Enemy Act

Also known as: TWEA, Trading with the Enemy Act of 1917

Simply put

The Trading with the Enemy Act (TWEA) is a United States federal law enacted on October 6, 1917, during World War I, that restricts trade and financial dealings with nations deemed to pose a threat to U.S. national security. It gives the President authority to regulate or prohibit certain transactions with designated foreign countries and parties. Today its practical reach is very narrow, and its exact current application should be confirmed against the applicable U.S. determinations and proclamations.

Formal definition

The Trading with the Enemy Act (TWEA), codified at 50 U.S.C. Chapter 53 and enacted October 6, 1917 following the U.S. declaration of war, authorizes the President to define, regulate, restrict, or prohibit trade, foreign exchange transactions, transfers of gold or silver, and related dealings with designated 'enemy' or 'ally of enemy' persons and jurisdictions, including through a licensing regime. Section 5(b) historically served as a principal source of presidential economic sanctions authority, though it was amended in 1977 (in connection with the enactment of the International Emergency Economic Powers Act) to restrict its use largely to periods of declared war. In current practice, TWEA authority is exercised only with respect to Cuba, which requires annual renewal by the President; its earlier application to North Korea was terminated by Presidential Proclamation 8271 on June 26, 2008. Practitioners should treat the specific jurisdictions, determinations, and renewal dates as time-sensitive and verify them against the current U.S. Code text and the applicable presidential proclamations and determinations, as scope may change.

Why it matters

The Trading with the Enemy Act matters because it is one of the foundational statutes in the history of U.S. economic sanctions, and for decades its Section 5(b) served as a principal source of presidential authority to regulate or prohibit trade and financial dealings with designated foreign parties. Understanding TWEA helps compliance professionals appreciate how the modern U.S. sanctions architecture evolved, including the 1977 amendment that, in connection with the enactment of the International Emergency Economic Powers Act (IEEPA), narrowed TWEA's use largely to periods of declared war and shifted most peacetime sanctions authority to other instruments.

In current practice, TWEA's operational reach is very narrow. Its authority is exercised only with respect to Cuba, and that application requires annual renewal by the President. Its earlier application to North Korea was terminated by Presidential Proclamation 8271 on June 26, 2008. As a result, practitioners who encounter references to TWEA should be careful not to overstate its scope: the vast majority of contemporary U.S. sanctions programs administered by OFAC rest on IEEPA and program-specific authorities rather than TWEA.

Because the specific jurisdictions, determinations, and renewal dates tied to TWEA are time-sensitive, they should always be confirmed against the current U.S. Code text and the applicable presidential proclamations and determinations. Treating TWEA as a broad, general-purpose sanctions authority, or assuming it still governs jurisdictions from which it has been withdrawn, can lead to a materially incorrect understanding of which legal basis applies to a given restriction.

Who it's relevant to

Sanctions compliance officers

Professionals designing and maintaining sanctions programs need to identify the correct legal basis for each restriction. Because TWEA today applies only to Cuba and requires annual presidential renewal, compliance teams should confirm which authority underpins Cuba-related controls and avoid attributing other U.S. sanctions programs, most of which rest on IEEPA, to TWEA.

Legal and regulatory counsel

Attorneys advising on the scope of U.S. sanctions authority benefit from understanding TWEA's history, its 1977 amendment restricting Section 5(b) largely to periods of declared war, and its current narrow application. Counsel should treat jurisdictions, determinations, and renewal dates as time-sensitive and verify them against the current U.S. Code and applicable presidential proclamations.

Trade finance and export teams

Personnel handling cross-border trade and financing involving Cuba may encounter TWEA-based restrictions and licensing requirements. They should confirm the current status of the applicable authority and any licensing conditions rather than assuming TWEA governs dealings with other jurisdictions, given that its application to North Korea was terminated in 2008.

Financial intelligence analysts and investigators

Analysts reviewing transactions for potential sanctions exposure need to distinguish which U.S. legal instrument applies to a given jurisdiction. Correctly identifying TWEA's narrow present scope, limited to Cuba and subject to annual renewal, helps ensure that alerts and assessments cite the accurate legal basis and reflect the current state of the applicable proclamations and determinations.

Inside TWEA

Statutory Basis and Origin

The Trading with the Enemy Act (TWEA) is a US federal statute originally enacted during World War I. It grants the President authority to regulate, restrict, or prohibit trade and financial transactions with designated enemy or hostile foreign interests. It is a domestic US instrument and does not derive from the FATF Recommendations, EU instruments, or the UK regime; practitioners should confirm the current codified text and any amendments against the applicable US Code provisions and implementing regulations.

Presidential Authority

TWEA delegates broad powers to the President to prohibit or regulate transactions involving property in which a foreign country or foreign national has an interest. Historically these powers extended to both wartime and, at earlier points, declared national emergencies, though the emergency dimension was subsequently narrowed by later legislation such that the International Emergency Economic Powers Act (IEEPA) now serves as the principal peacetime sanctions authority. Exact scope should be verified against the current statute.

Current Scope of Application (Cuba)

At present, TWEA authority is exercised only with respect to Cuba. The application of TWEA to Cuba is maintained through an annual renewal by the President (for example, by a Presidential Determination). This is the sole remaining jurisdiction to which TWEA is presently applied, a distinction that materially affects how the statute is understood operationally.

Termination of North Korea Application

TWEA was previously applied to North Korea, but that application was terminated by Presidential Proclamation 8271 dated June 26, 2008. Sanctions and restrictions relating to North Korea are now administered under other authorities rather than TWEA. Treating TWEA as a live North Korea authority would give a materially incorrect picture of its scope.

Administration and Implementation

In practice, restrictions arising under TWEA are implemented and administered through the US Treasury's Office of Foreign Assets Control (OFAC) via implementing regulations. For obliged entities, compliance obligations are operationalized through OFAC's sanctions programs, licensing framework, and reporting requirements rather than through the bare statutory text.

Common questions

Answers to the questions practitioners most commonly ask about TWEA.

Is the Trading with the Enemy Act currently used to sanction North Korea?

No. TWEA authority was terminated with respect to North Korea by Presidential Proclamation 8271 on June 26, 2008. North Korea-related sanctions programs are now administered under other authorities, principally the International Emergency Economic Powers Act (IEEPA), rather than TWEA. Compliance teams should not treat TWEA as the operative basis for North Korea measures.

Does TWEA apply broadly to multiple sanctioned jurisdictions today?

No. Although TWEA historically provided authority over trade with several designated enemies, its present-day application is limited to Cuba, which is the sole remaining jurisdiction to which TWEA is currently applied. This authority is renewed annually by presidential determination. Treating TWEA as a broad, multi-jurisdiction authority would give a materially incorrect picture of its current scope.

How should a compliance program treat the annual renewal of TWEA authority over Cuba?

Because TWEA's application to Cuba is renewed annually by presidential determination, compliance teams should track each renewal to confirm the authority remains in effect and monitor for any accompanying changes. Practically, this means incorporating the renewal cycle into a periodic review of the sanctions program's legal basis and confirming that Cuba-related controls, which operate under the Cuban Assets Control Regulations administered by OFAC, remain current. Exact renewal instruments and dates should be confirmed against official sources.

Where should staff look to identify the operating rules for TWEA-based Cuba sanctions?

The substantive prohibitions and licensing provisions for Cuba are set out in the Cuban Assets Control Regulations administered by OFAC, which give effect to the underlying TWEA authority. Screening, licensing, and reporting obligations flow from those regulations rather than from the text of TWEA itself. Staff should treat the regulations, together with OFAC guidance and general and specific licenses, as the operational reference and confirm applicability to their institution's transactions and counterparties.

Does confirming TWEA authority over Cuba mean any Cuba-linked transaction is automatically prohibited?

No. The existence of the authority does not itself determine the treatment of a particular transaction. Whether a specific dealing is prohibited, permitted under a general or specific license, or outside scope depends on the applicable regulatory provisions and the facts. A screening alert or apparent Cuba nexus is a signal for review, not a conclusion of wrongdoing, and firms should assess each case against the governing rules and, where needed, seek licensing or legal input.

How does TWEA differ from IEEPA for the purposes of a sanctions compliance framework?

TWEA and IEEPA are distinct statutory authorities. In current practice, TWEA is applied only to Cuba, while many other U.S. sanctions programs, including those addressing North Korea, are administered under IEEPA. For program documentation, mapping each sanctions program to its correct underlying authority helps ensure that legal-basis references, renewal tracking, and internal controls are accurate. Institutions should confirm the specific authority for each program against official OFAC materials.

Common misconceptions

TWEA currently applies to North Korea and other hostile states.

TWEA authority is presently exercised only with respect to Cuba. Its application to North Korea was terminated by Presidential Proclamation 8271 on June 26, 2008, and North Korea-related measures are now administered under other authorities. TWEA should not be described as a general, multi-country sanctions authority in its current use.

TWEA is the primary legal basis for most modern US economic sanctions programs.

In current practice the International Emergency Economic Powers Act (IEEPA) is the principal authority underpinning most peacetime US sanctions programs. TWEA's live application is now limited to Cuba, maintained through annual presidential renewal, so it is generally not the operative authority for other programs.

The application of TWEA to Cuba is permanent and self-executing.

The exercise of TWEA authority with respect to Cuba is renewed annually by the President rather than being permanent. Practitioners should confirm that a current-year renewal is in effect and consult OFAC's implementing regulations for the operative restrictions.

Best practices

Do not treat TWEA as a general multi-jurisdiction sanctions authority; recognize that its live application is presently limited to Cuba and that its former application to North Korea was terminated in 2008.

For Cuba-related exposure, confirm that the current annual presidential renewal of TWEA authority is in effect before relying on it, and check the effective dates against the applicable Presidential Determination.

Screen and administer transactions against OFAC's implementing regulations and sanctions programs rather than the bare statutory text, since TWEA restrictions are operationalized through OFAC.

Distinguish TWEA from IEEPA when documenting the legal basis of a sanctions control, as IEEPA underpins most other US sanctions programs while TWEA's current use is narrow.

Verify all specific statutory citations, effective dates, and renewal instruments against the current US Code and OFAC guidance before relying on them in policies, filings, or client advice.

Where trade or financial activity may involve Cuba, escalate for sanctions review and, where relevant, assess whether an OFAC license is required, treating screening as a measure to detect and manage risk rather than a guarantee of compliance.