Practical guide
OFAC’s 50 Percent Rule and the limits of name screening
Understand OFAC’s 50 Percent Rule with synthetic ownership examples, a review checklist, and the limits of a sanctions list search.
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Why an unlisted company can still be blocked
OFAC’s 50 Percent Rule can affect an entity that does not appear by name on the SDN List. Under the rule, an entity owned directly or indirectly 50 percent or more in aggregate by one or more blocked persons is considered blocked. OFAC explains aggregation in FAQ 399 and indirect ownership in FAQ 401, linked below.
A list-screening response does not contain a complete ownership investigation. A no-match result for an organization therefore cannot answer whether blocked persons own it. Keep the SDN List check, the ownership evidence, and the legal analysis as separate, traceable parts of the review.
Synthetic example: combine the relevant ownership stakes
The companies and stakes in this example are invented. Assume blocked person A owns 30 percent of Cedar Finch Components and blocked person B owns 20 percent. Their combined ownership is 50 percent. Applying the stated OFAC rule to those assumptions, the company is considered blocked even if a search for its own name returns no match.
The difficult work is establishing the assumptions: who the owners are, whether they are the relevant blocked persons, which interests they hold, and when the ownership information was true. A matching name or an unverified spreadsheet is not sufficient proof of those facts. OFAC aggregates relevant ownership across blocked persons even where they are blocked under different programs.
Synthetic example: an ownership chain needs its own analysis
Assume blocked person A owns 50 percent of fictional Holding Company B, which owns 50 percent of Operating Company C. OFAC’s FAQ 401 explains that B is blocked and its 50 percent stake makes C blocked as well. Multiplying the two percentages to produce 25 percent would miss how the rule operates in this example.
Real structures can include several owners and intermediate entities. Map each relevant layer, retain the evidence for each ownership link, and apply the authority’s actual guidance. These examples explain the boundary of a name search; they are not an automated calculator for complex structures or other jurisdictions.
Separate ownership, control, and the proposed activity
OFAC’s FAQ 398 distinguishes control from the 50 Percent Rule’s ownership test. Control without the required ownership does not by itself make an entity automatically blocked under that rule. It can still matter to other restrictions and risk analysis, including dealings involving a blocked person acting for an otherwise unblocked entity.
Do not turn an ownership stake below 50 percent into a universal permission to transact. The applicable program, other jurisdictions, the parties involved, and the activity can raise additional questions. An OFAC rule should not be copied into a UK, EU, or Swiss ownership-and-control assessment as though the standards were identical.
Ownership review checklist
Keep an ownership review record that another analyst can reconstruct. Identify the date of the assessment and unresolved branches of the structure. If the evidence is incomplete, preserve that uncertainty rather than treating unknown ownership as zero ownership.
- Identify the relevant jurisdiction, restriction, and activity being assessed.
- Collect reliable ownership evidence for the subject and relevant intermediate entities.
- Identify and screen the relevant owners using known facts, then resolve potential identity matches.
- Record the source and date for each ownership stake and any unresolved inconsistency.
- Apply the relevant aggregation and indirect-ownership rules with appropriate legal review.
- Record the conclusion, its scope, responsible reviewer, and triggers for reassessment.
What SanctionsKit contributes to the workflow
SanctionsKit screens submitted subjects against selected sources and provides match evidence. It does not obtain beneficial-ownership data, research ownership chains, calculate aggregated percentages, or determine control. A shared address or similar company name does not establish a corporate relationship.
Use precise downstream language: no potential match in the selected sources describes the screening result. Store any ownership conclusion with its separate supporting investigation. The screening limitations guide explains the other questions a list check leaves open.