An examiner reviewing a sanctions program will ask how your firm finds counterparties that are blocked without appearing on any list. A name search cannot show it. The status comes from the owners. You find it in the ownership chain: who holds the shares, through which companies, and whether any holder is listed. Building that chain is the job of KYB and UBO verification, and the 50 percent rule is the arithmetic you then apply to it.
What does the OFAC 50 percent rule say?
OFAC's revised guidance of 13 August 2014 says blocked persons are "considered to have an interest in all property and interests in property of an entity in which such blocked persons own, whether individually or in the aggregate, directly or indirectly, a 50 percent or greater interest." Such an entity is blocked whether or not it is listed, and a US person generally may not deal with it unless OFAC authorizes it.
Under that wording a stake of exactly half is enough, several blocked owners count together, and shares held through other companies count too.
Picture a logistics company (illustrative) owned half by a person on the SDN List and half by a pension fund. It appears on no list, yet a US bank holding its deposit has to block the funds.
How do stakes held by different blocked owners add up?
Table 1. Five ownership structures for one company under OFAC's rule (illustrative)
| Owners of Company T | Blocked stakes added | Result under the 50 percent rule |
|---|---|---|
| One SDN holds 50% | 50% | Blocked |
| SDN A holds 35%, SDN B holds 15% | 50% | Blocked |
| Three SDNs, each designated under a different OFAC program, hold 20%, 20% and 10% | 50% | Blocked, because stakes under different programs are added |
| One SDN holds 49% | 49% | Not blocked by the rule; OFAC urges caution |
| An SDN holds 40%, the SDN's unlisted brother holds 15% | 40% | Not blocked by the rule; check whether the brother holds the shares for the SDN |
OFAC adds up the stake of every blocked owner and compares the total with 50 percent. In FAQ 399 it confirms that "the ownership interests of persons blocked under different OFAC sanctions programs are aggregated", so the third row reaches 50 percent although no two owners share a program.
Only blocked persons count. A relative, nominee or partner who is not listed adds nothing to the sum, which is why the last row stops at 40 percent. Whether that brother really holds for the listed person is a question of control, which the EU and UK test directly and OFAC handles apart from the rule.
The ultimate beneficial owner test draws its line somewhere else. Most beneficial ownership rules set it at 25 percent, so a KYB verification file that records only beneficial owners would miss SDN B at 15 percent in the second row.
How does OFAC count ownership through a chain of companies?
FAQ 401 counts indirect ownership company by company. It defines "indirectly" as ownership "through another entity or entities that are 50 percent or more owned in the aggregate by the blocked person(s)". Two working rules follow:
- A company that is itself blocked passes its whole stake to the blocked owner.
- A company that is not blocked passes nothing, whatever the blocked person's share in it.
In OFAC's Example 2, blocked person X owns 50 percent each of Entity A and Entity B, which each own 25 percent of Entity C. A and B are blocked, so X is treated as owning 25 plus 25 percent of C, and C is blocked. Multiplying down each path would have given X 12.5 plus 12.5 percent and a clean result.
In Example 4, X owns 50 percent of A but 25 percent of B, and each owns 25 percent of C. B is not blocked, so its stake counts for nothing and C is not blocked. Example 5 gives X 25 percent each of A and B, which own all of C between them; neither passes anything on, and C stays unblocked.
Mark each company blocked or not from the listed owner down, and add the stakes only after that.
Does control without majority ownership make a company blocked?
Picture a shipping agent (illustrative) whose managing director is on the SDN List but holds no shares, while unlisted investors own the whole company. Under OFAC's rule the agent is not blocked. FAQ 398 is explicit: "An entity that is controlled (but not owned 50 percent or more) by one or more blocked persons is not considered automatically blocked".
OFAC can still designate a controlled company, and it urges caution where blocked persons hold a significant minority stake or control a company by other means. FAQ 400 draws a firm line: US persons may not, for example, enter into contracts signed by a blocked individual, even one signing for a company that is not blocked. A US firm dealing with the shipping agent therefore cannot negotiate with its managing director or accept a contract that director signs.
How do the EU and UK ownership and control tests differ?
Table 2. The same ownership questions under US, EU and UK rules (as of 1 November 2026)
| Question | US (OFAC) | EU | UK (OFSI) |
|---|---|---|---|
| Ownership threshold | 50% or more | 50% or more of the proprietary rights, or a majority interest | More than 50% of shares or voting rights |
| Stakes of several listed owners | Added together | Added together | Not simply added, unless held jointly or under a joint arrangement |
| Control without that ownership | Not blocked by the rule; OFAC may designate | Counts; the Council lists eight criteria, rebuttable case by case | Counts: board majority, or affairs run as the person wishes |
| Listed owners at 35% and 15% | Blocked | Owned, in principle | Generally not owned on shares alone |
| Where it is written | 2014 guidance; FAQs 398 to 402 | EU Best Practices, paragraphs 62 to 68 | OFSI general guidance, section 4 |
The EU Best Practices, in the Council's update of 3 July 2024, treat a holding of "50% or more of the proprietary rights" or a majority interest as ownership and take aggregated ownership into account (paragraph 63). For control, paragraph 64 lists eight criteria, among others, from the right to appoint most of the board to dominant influence used in fact, including through a front company. One sign the Council names for closer analysis: a designated person holds 40 percent while every other shareholder holds 10 (paragraph 67).
The UK test works per person. OFSI's general guidance says it "would not simply aggregate different designated persons' holdings in a company" unless, for example, the shares are subject to a joint arrangement between the designated parties or one controls the rights of the other (section 4.1.4). In a joint overview of 23 June 2026, OFAC and OFSI state that OFSI's requirement "does not apply when different designated persons' shareholdings in an entity amount to 50 percent or more". The 35 and 15 percent company is blocked in the US, owned in principle in the EU and, without signs of control, generally outside UK sanctions.
When does the BIS 50 percent rule for export controls apply?
The Bureau of Industry and Security (BIS), the US export control agency, issued the Affiliates Rule on 29 September 2025. It extended Entity List restrictions to foreign affiliates at least 50 percent owned, directly or indirectly, by listed entities, and the interim final rule applied the same test to the military end user list and to SDNs named under certain OFAC programs. BIS wrote the standard to be consistent with longstanding Treasury practice.
Six weeks later, BIS suspended it. The suspension rule of 12 November 2025 stays it from 10 November 2025 until 9 November 2026 and adds its provisions back into the Export Administration Regulations effective 10 November 2026. BIS's Federal Register notices page, read on 1 November 2026, gave the condition: "The suspension is set to end November 9, 2026, absent a future extension." From 10 November 2026 the Affiliates Rule applies again unless BIS has published an extension. None had appeared in the Federal Register by 1 November 2026, so check the notices page on the day of the export decision.
How do you screen a company for the 50 percent rule?
Work through the structure in this order, owners first and the company last:
- Ask for the chart. List every shareholder and holding company up to the people at the top, with percentages. The enhanced KYB form for complex ownership asks the customer for a chart of every layer up to the beneficial owners and whether a nominee holds shares; add a line for holders below 25 percent, where its beneficial owner question stops.
- Check it against outside records. A registry extract confirms the direct shareholders. The free LEI Lookup shows the direct and ultimate accounting parent, which places an entity in its group but does not give the shareholdings the rule needs.
- Run each holder through the lists. Holding companies need screening as much as people, because a listed intermediary passes on its whole stake. The free Sanctions Check from complead, formerly Sanction Scanner, takes one name per run and searches the SDN, UK, EU and UN Security Council lists.
- Mark, then add. Mark each company blocked or not, starting from the listed owners, and add the blocked stakes. Repeat for each regime that applies to you.
- Test control. Look for listed directors, signatories and nominee holders, which the EU and UK count.
- Treat gaps as findings. OFAC urges due diligence to determine ownership stakes (FAQ 401), and the Affiliates Rule names an ownership percentage that cannot be determined as a red flag (Red Flag 29). Where a layer stops short of a person, record that the beneficial owner cannot be identified and why.
- Record the reasoning. Keep the chart, the hits, the sum, the regime tested and the date.
When an owner turns out to be blocked
Picture a supplier (illustrative) found to be 55 percent owned by an SDN as a US firm receives its payment. The funds are blocked. OFAC's regulations require a report within 10 business days. A later sell down does not release them: under FAQ 402, blocked property stays blocked until OFAC authorizes a dealing or delists the owner. In the EU, an operator that learns an unlisted entity is owned or controlled by a listed person should inform the competent authority of the Member State and the Commission (paragraph 75).
Owners and lists both change after onboarding, so the chain needs rescreening. With complead's client screening and ongoing monitoring, each owner can be put under monitoring through the API and matched to 3,500+ sanctions, PEP and watchlists from 220+ jurisdictions, refreshed every 15 minutes. A new listing raises an alert, and the analyst decides what follows.
Sources behind this page. Primary texts, read on 1 November 2026: OFAC's 2014 guidance and FAQs 398 to 402, the Council's EU Best Practices of 3 July 2024, OFSI's general guidance and its June 2026 overview with OFAC, and the two Affiliates Rule documents with BIS's notices page.
