Does the OFAC 50 Percent Rule block your counterparty? Working the ownership chain
Quick answer, Nov 2, 2026As of 2 November 2026, an entity is blocked under OFAC's 50 Percent Rule when one or more blocked persons own 50 percent or more of it, directly or indirectly, in the aggregate. Control alone does not block an entity. Ownership stakes are aggregated across sanctions programs, and the rule is applied layer by layer.
The rule
Treasury's Revised Guidance on Entities Owned by Persons Whose Property and Interests in Property Are Blocked (13 August 2014) states that "any entity owned in the aggregate, directly or indirectly, 50 percent or more by one or more blocked persons is itself considered to be a blocked person," and is blocked "regardless of whether the entity itself is listed." A clean list search is therefore not a clearance.
Treasury's five worked examples
OFAC sets out five structures in FAQ 401. They are the test you run on each layer.
| # | Structure | Result | Why |
|---|---|---|---|
| 1 | X owns 50% of A; A owns 50% of B | B is blocked | A is blocked outright, and A's 50% of B blocks B in turn |
| 2 | X owns 50% of A and 50% of B; A and B each own 25% of C | C is blocked | X indirectly owns 25% + 25% = 50% of C; A and B are blocked and together own 50% |
| 3 | X owns 50% of A and 10% of B; A owns 40% of B | B is blocked | X's indirect 40% through A plus its direct 10% totals 50% |
| 4 | X owns 50% of A and 25% of B; A and B each own 25% of C | C is not blocked | B is not 50% owned by X, so B's stake passes nothing; X reaches 25% |
| 5 | X owns 25% of A and 25% of B; A and B each own 50% of C | C is not blocked | Neither A nor B is blocked, so neither passes anything to C |
Examples 4 and 5 carry the pattern: an intermediate entity held below 50 percent passes nothing through. It either clears 50 percent and is blocked itself, or the branch is a dead end. FAQ 399 adds aggregation across holders: two blocked persons at 25 percent each block the entity, and "the ownership interests of persons blocked under different OFAC sanctions programs are aggregated."
Four things the rule does not do
- It does not reach control. FAQ 398: "OFAC's 50 Percent Rule speaks only to ownership and not to control." An entity controlled by a blocked person but owned under 50 percent is not automatically blocked; OFAC "urges caution" and notes such entities "may become the subject of future designations."
- It does not let a blocked person sign. FAQ 400 says transactions involving a blocked person are generally prohibited "even if the blocked person is acting on behalf of a non-blocked entity." Check who signs, not only who owns.
- It does not unwind property already blocked. Under FAQ 402, divestment below 50 percent entirely outside US jurisdiction ends the automatic blocking going forward, but property already properly blocked stays blocked until OFAC authorises otherwise or delists the person. OFAC asks for diligence that the divestment happened and "was not merely a sham transaction."
- It is not the only route to blocked status. FAQ 398 notes that several sanctions programs block certain persons without any OFAC designation, on criteria separate from this rule.
The order to work a chain in
- Screen the counterparty against the Sanctions List Search and the Consolidated Screening List, by the method in How to screen a counterparty against OFAC lists.
- Pull the shareholder record and list every direct holder with its percentage. A holder you cannot name is the finding, not a gap to round off.
- Screen each direct holder, then add every blocked holder's stake together, across programs, before deciding.
- Go up one layer for each holder at 50 percent or more, and repeat. Stop a branch below 50 percent, because nothing passes through it.
- Record the date and source of each percentage. Ownership moves and the lists move. A file without dates will not answer the question again next quarter.
Where the public record runs out
The rule is arithmetic. The input is the hard part: nominee holders, a registry that publishes no shareholders, a trust whose beneficiaries are filed nowhere. Where the chain goes dark above the second layer, the answer is field work, not a better database. Brief an advisor and we arrange the ownership investigation with a firm that works in that jurisdiction and stay your contact through it.
In an AI assistant
search_screening_lists on the Distributed Risk MCP server screens each holder you name, from Claude, ChatGPT or another client, with each list's last-changed date in the answer. list_ofac_actions shows the designations and removals since you last ran the chain. Neither reads an ownership register for you: step 2 stays yours. Setup is in Using a sanctions MCP server.
Questions
Does 49 percent make a counterparty safe? No. It takes the entity outside the automatic rule and leaves you one OFAC has expressly flagged for caution. Document the stake, the date and who signs.
Do stakes under different sanctions programs count together? Yes. FAQ 399 states that the interests of persons blocked under different programs are aggregated.
Can a licence authorise a transaction with a blocked entity? Sometimes, and then the licence terms are the gate, not the ownership arithmetic. See OFAC general licenses: what to check.
Is this legal advice? No. This page is a procedural checklist drawn from the public record. Counsel decides what applies.