Menu
Banking Exchange Magazine Logo
Menu

Ownership Obscurity Clouds Sanctions Compliance

What Financial Institutions Need to Know about OFAC's 50% Rule

Ownership-Obscurity-WhitepaperUnderstanding OFAC's 50% Rule
In 2008, OFAC first addressed its 50% Rule, before updating it in 2014 for further clarity. The revised guidance issued in 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."

That simple sentence within a one-page guidance update actually contains several complicated sanctions messages:

Avoid Majority Ownership

Legal entities within the above definition are blocked from any kind of business transaction with U.S. persons. Furthermore:

  • The entities don't have to be specifically mentioned in an executive order.
  • They don't have to be named on the SDN list.
  • The 50% ownership can be structured through one or more other legal entities.
  • The 50% ownership can be reached by combining smaller shares of multiple blocked persons.

This rule applies to all transactions, including when the legal entity is a direct vendor of the financial institution or supplying goods or services through another third-party vendor or intermediary.

Get Your Report

This white paper is brought to you by CSI

CSIlogo250

back to top

Sections

About Us

Connect With Us

Resources