Choose the right next step
Start with the counterparty
Search the submitted identity, then review available list and ownership evidence. A name result alone cannot resolve ownership-derived blocking.
No direct match is not legal clearance. Missing ownership evidence is not evidence of no ownership.
The rule in plain language
OFAC's revised guidance says an entity owned 50 percent or more in the aggregate, directly or indirectly, by one or more blocked persons is itself considered blocked. The entity does not need to appear by name on the SDN List. US persons generally may not transact with such an entity unless OFAC authorizes the activity.
The analysis is about blocked persons, relevant ownership interests, aggregation, and the path through which ownership is held. “Sanctioned,” “listed,” and “high risk” are not interchangeable shortcuts for that test.
Aggregation: 25 percent plus 25 percent can reach the threshold
OFAC FAQ 399 confirms that ownership stakes of multiple blocked persons are added together. Its example treats an entity as blocked when one blocked person owns 25 percent and another owns 25 percent. OFAC also says interests held by persons blocked under different sanctions programs are aggregated.
This is why a review cannot stop at the largest shareholder. It must identify every relevant blocked owner and preserve the arithmetic used to reach—or not reach—the threshold.
Indirect ownership is not simple percentage multiplication
OFAC FAQ 401 provides multi-hop examples. A blocked person's 50 percent ownership of Entity A makes Entity A blocked; Entity A's 50 percent ownership of Entity B can then make Entity B blocked. Other examples aggregate ownership through multiple blocked intermediary entities.
The same FAQ also shows structures that do notreach the rule. Ownership paths must be evaluated according to OFAC's blocked-entity logic, not by blindly multiplying every percentage in a corporate tree.
Control and ownership are different
OFAC FAQ 398 says control below 50 percent aggregate ownership does not automatically block an entity under the 50 Percent Rule. OFAC may separately designate a controlled entity, and transactions can still involve a blocked person or another program-specific restriction. The correct disposition is therefore not “clear”; it is a documented review of the applicable facts and authority.
A defensible ownership review
- Resolve the counterparty. Confirm legal identity, aliases, country, address, and registration identifiers.
- Identify direct owners. Record ownership percentages, dates, sources, and whether the interest is current.
- Trace relevant indirect paths. Determine which intermediary entities are themselves blocked under OFAC's logic.
- Aggregate blocked ownership. Include relevant owners across OFAC programs and show the arithmetic.
- Separate control from ownership. Preserve control evidence as a distinct risk factor rather than silently treating it as a 50 Percent Rule conclusion.
- Record uncertainty. Missing, stale, disputed, inferred, or source-conflicted stakes require escalation—not a fabricated percentage.
- Apply the transaction facts. Confirm the applicable program, parties, conduct, property interests, jurisdiction, and authorization with qualified counsel where needed.
What Embargo can and cannot establish
Embargo can surface approved source-linked parent or affiliate evidence where reliable data is available, alongside direct registry matches and source provenance. It can preserve the evidence reviewed and make unresolved relationships visible.
Embargo does not claim complete ownership coverage, infer missing ownership as fact, or certify that an unlisted entity is legally blocked or cleared. A displayed relationship is evidence for review; the legal outcome depends on verified ownership, the blocked status of relevant persons, current authority, and transaction facts.
Official OFAC sources
- Revised Guidance on Entities Owned by Blocked Persons
- FAQ 398: ownership versus control
- FAQ 399: aggregate ownership
- FAQ 401: indirect ownership examples
- OFAC Sanctions List Service
Frequently asked questions
What is OFAC's 50 Percent Rule?
OFAC states that an entity owned 50 percent or more in the aggregate, directly or indirectly, by one or more blocked persons is itself considered blocked, whether or not the entity is named on the SDN List.
Are ownership stakes from different blocked persons added together?
Yes. OFAC FAQ 399 says relevant ownership interests are aggregated, including interests held by persons blocked under different OFAC sanctions programs.
Does control below 50 percent automatically block an entity?
No. OFAC FAQ 398 says the rule speaks to ownership, not control. OFAC nevertheless urges caution because other restrictions, a blocked person's role in a transaction, or a future designation may still matter.
Does a clean name search resolve the 50 Percent Rule?
No. An entity can be considered blocked without appearing by name on the SDN List. Review direct and indirect owners, aggregate relevant stakes, resolve identity, and preserve the evidence and uncertainty used in the decision.
Does Embargo determine whether an unlisted entity is legally blocked?
No. Embargo can surface approved source-linked ownership evidence where available and identify evidence gaps. Coverage is not complete, and the product does not replace transaction-specific legal analysis.