Can someone explain how OFAC's 50% rule works?

[Jonh Newman]

Can someone explain how OFAC's 50% rule works? I'm trying to determine if a company we're considering as a partner is subject to sanctions.

[Konstantin Volkov]

The 50% rule states that entities owned 50% or more, directly or indirectly, by one or more SDN-listed persons are themselves treated as blocked, even if not explicitly listed on the SDN list. This extends blocking sanctions beyond specifically named entities. The ownership calculation can be complex - you need to look at both direct ownership and indirect ownership through subsidiaries. For example, if SDN Entity A owns 30% of Company B, and SDN Entity C owns 25% of Company B, Company B would be blocked under the 50% rule (55% total SDN ownership). This makes due diligence complicated because you can't just check if a company is on the list. I found detailed examples of 50% rule calculations on ofacblockedfundslawyers.com that helped me understand various ownership structures. Always investigate ownership structures thoroughly before entering business relationships.