OFAC 50 Percent Rule

The OFAC 50 Percent Rule treats property and interests in property of an entity as blocked when one or more blocked persons directly or indirectly own 50 per cent or more of that entity in aggregate. The entity can be blocked even if it does not appear by name on the Specially Designated Nationals and Blocked Persons List.

Aggregation and indirect ownership

Ownership by multiple blocked persons is aggregated. If blocked person A owns 25 per cent and blocked person B owns 25 per cent, the entity reaches the threshold. Indirect ownership is traced through ownership chains. An entity 50 per cent owned by a blocked person is itself blocked; its qualifying ownership in a lower-tier entity is then considered under the same guidance.

Beneficial-ownership mapping should preserve each intermediate percentage, date and source. Legal title, voting rights and control are not interchangeable. OFAC FAQ 398 states that control without 50 per cent ownership does not automatically block an entity, although dealings may present sanctions risk and OFAC may designate a controlled entity separately.

Blocking and designation

Automatic blocking under the rule is a property consequence, not a separate named designation or criminal verdict. United States persons must treat covered property as blocked under the applicable programme, subject to licences or exemptions. Asset freeze mechanics, reporting and release depend on the governing regulations.

The rule is programme-specific. OFAC FAQ 857 states that it does not apply to entities listed solely under the Non-SDN Chinese Military-Industrial Complex Companies programme. An exact-name securities restriction is therefore not extended through ownership as though it were an SDN blocking programme.

Ownership changes

A divestment below 50 per cent does not automatically resolve every issue. Analysts must establish that the ownership change is genuine and effective, determine when it occurred, identify any blocked property already held, and assess whether authorisation is required to release or transfer that property. Retained control may also justify caution or separate designation even where automatic blocking no longer follows from ownership.

Compliance assessment

The rule expands the screening perimeter beyond names and creates a Compliance cascade through corporate hierarchies. Assessment should identify the blocked owners, direct and indirect percentages, aggregation method, programme, effective date and evidence quality. A corporate registry or commercial database is a source, not an adjudication. As at 30 July 2026, revised guidance and FAQs 398, 401, 402 and 857 control the current explanation.

Operational controls

Screening should use ownership at the transaction date and preserve documents for each tier. Share classes, voting arrangements, trusts and state ownership may require legal analysis beyond a percentage field. If reliable information is unavailable, enhanced diligence or refusal may be prudent, but uncertainty should not be reported as established blocked status.

Licences can authorise dealings with blocked property under stated conditions. A general or specific licence does not change the ownership calculation; it changes whether the otherwise prohibited transaction may proceed. Reporting and recordkeeping continue according to the applicable regulations.

Sources

1. United States Department of the Treasury, Revised guidance on entities owned by persons whose property and interests in property are blocked.
2. United States Department of the Treasury, OFAC FAQ 401 (accessed 30 July 2026).
3. United States Department of the Treasury, OFAC FAQ 402 (accessed 30 July 2026).
4. United States Department of the Treasury, OFAC FAQ 857 (accessed 30 July 2026).
5. United States Department of the Treasury, OFAC FAQ 398 (accessed 30 July 2026).