What is the OFAC 50 Percent Rule?

The rule means the SDN list is not the full set of parties a US person must treat as blocked. A subsidiary, joint venture or fund that blocked persons together own at least half of is blocked by operation of the rule from the moment the ownership exists, with no designation and no list entry. Screening the lists finds the owners; finding the subsidiary is a matter of knowing who owns it.

OFAC first issued the guidance in February 2008 and revised it on 13 August 2014 to add aggregation and indirect ownership; the revised text is published as OFAC FAQ 401. It is guidance, not a regulation, but it describes how OFAC reads the blocking prohibitions it enforces, and its penalties for dealing with a 50-percent-owned entity are the same as for dealing with a listed one.

Three features do the work. Ownership is aggregated: the stakes of every blocked person are added together, so two blocked persons holding 25 percent each block the entity. Ownership counts indirectly: a stake held through an entity that is itself blocked — by designation or by the rule — passes down the chain. And the rule turns on ownership alone: a blocked person who controls a company without owning half of it does not make it blocked.

OFAC's worked examples (FAQ 401) show how the chain is read:

No. OFAC's FAQ 398 (11 August 2020) states that the rule speaks only to ownership and not to control, so an entity a blocked person controls through minority shareholdings, board seats, contracts or family members is not blocked automatically. OFAC may still designate such an entity under a program's own criteria — in June 2024 it designated four Liechtenstein foundations and a Cyprus company for being controlled by the Russian oligarch Vladimir Potanin after he had transferred his shares to them — and until it does, the entity is not blocked.

The same FAQ urges caution all the same. Entities with significant minority blocked ownership, or blocked control by other means, may be designated at any time, and a blocked individual acting for a non-blocked entity — signing its contract, directing its payments — is a dealing with a blocked person regardless of the entity's status.

If blocked owners sell down so that their aggregate stake is under 50 percent, the entity stops being blocked by the rule — provided the divestment happened entirely outside US jurisdiction without any US person involved, and was genuine. Property that was already blocked while the threshold was met stays blocked: an unauthorised transfer of a blocked interest within US jurisdiction is not recognised, and the property is released only when OFAC licenses it or delists the blocked owner (FAQ 402, 13 August 2014).

On 31 March 2026 OFAC published a Sanctions Advisory, Guidance on Sham Transactions and Sanctions Evasion, which it describes as supplementing the 50 Percent Rule: a transfer on paper that leaves the blocked person's interest intact does not end the blocking. Its red flags for a sham divestment:

The rule as written applies to blocked persons, and OFAC has applied the same ownership threshold to its directive-based programs: FAQ 1139 (31 October 2023) confirms that the Burma MOGE Financial Services Directive reaches any entity 50 percent or more owned, directly or indirectly, by MOGE. For Non-SDN listings generally, the restriction that passes down the chain is the one the program imposes on the parent — a sectoral debt limit rather than a full block.

A different 50 percent rule comes from the Department of Commerce: the Bureau of Industry and Security's Affiliates Rule of 29 September 2025 extended Entity List export restrictions to affiliates owned 50 percent or more by listed parties, and was suspended in November 2025 for one year. It governs exports under the Export Administration Regulations, not OFAC's blocking prohibitions; the two are often confused in search results and should be read separately.

A list screen can only find what is listed. The rule adds a second obligation: know who owns your counterparty, and screen those owners. In practice that means collecting beneficial-ownership information at onboarding, screening each owner's name and identifiers against the lists, and recomputing the aggregate whenever ownership changes or a shareholder is designated. Shell companies are the hard case — the ownership the rule depends on is exactly what a shell is built to hide.

CompliAPI covers the screening half: the entity's own identifiers (domain, emails, wallet addresses, registration numbers) and the names of the people and companies you identify as its owners, against OFAC's lists and the other official sanctions lists, with the source record on every match. It holds no ownership data and does not compute the aggregate; that part of the rule stays with your onboarding process.