50% rule
Also called OFAC 50 percent rule, ownership rule
The 50% rule treats any entity owned 50% or more, directly or indirectly, by one or more blocked persons as blocked itself. It applies even when the entity is not named on a sanctions list. The rule comes from US Treasury guidance, and the UK and EU apply their own ownership and control tests.
How it works
A bank screening a corporate customer cannot rely on list matches alone. It maps the ownership chain up to the ultimate owners and adds together the stakes held by sanctioned persons. Under US guidance, two blocked people holding 25% each make the company blocked. Ownership is calculated through every layer, so a subsidiary of a blocked company is blocked too.
The rule matters because unlisted subsidiaries far outnumber named targets. Missing one means processing a payment for a blocked entity. The UK test captures holdings of more than 50% and adds a control limb, and does not aggregate separate designated owners by default. US Treasury guidance from March 2026 tells firms to look past formal stakes to economic reality.
The rules
Entities owned 50% or more in aggregate, directly or indirectly, by blocked persons are blocked, whether or not they appear on the SDN list.
US persons and transactions with a US nexusTells firms to look beyond legal formalities to practical and economic reality when a blocked person may keep an interest after a sale.
US persons and firms dealing with blocked personsExtends Entity List restrictions to entities 50% or more owned by listed parties. Enforcement was suspended for one year from 10 November 2025.
Exporters of items subject to the EARAn entity is owned or controlled by a designated person who holds more than 50% of shares or voting rights, or can direct its affairs.
UK persons and conduct in the UKCommon questions
Does the 50% rule cover control as well as ownership?
OFAC's rule speaks only to ownership. An entity controlled by a blocked person but owned below 50% is not automatically blocked, although OFAC may designate it. The UK test includes a separate control limb, so a minority holder with board power can bring an entity into scope.
Are stakes held by different sanctioned people added together?
Under US guidance, yes. Holdings of blocked persons are aggregated, including those designated under different programmes. The UK does not simply aggregate separate designated persons' holdings unless there is a joint arrangement or one controls the other's rights.
Is the threshold the same in the US, UK and EU?
No. OFAC uses 50% or more. The UK and EU use more than 50%. A company owned exactly 50% by a sanctioned person can therefore be blocked in the US but fall outside the UK and EU ownership tests.
Do entities caught by the 50% rule appear on sanctions lists?
Usually not. Most are unnamed subsidiaries. Firms find them by combining ownership data with list screening. OFAC sometimes adds them to the SDN list for clarity, but the block applies whether or not it does.
