OFAC 50 Percent Rule Explained for Compliance Teams
October 5, 2026
The OFAC 50 percent rule says that any company owned 50 percent or more, directly or indirectly, by one or more blocked persons is itself blocked, even if its name never appears on the SDN list. You treat it exactly as if it were listed. That's why a clean name search alone can't tell you everything about a corporate customer.
The rule has been around since OFAC revised its guidance in August 2014, and it still trips up compliance teams. Here's how it works, with examples you can actually use.
The rule in plain words
OFAC blocks the property and interests in property of the people and companies it designates. Its guidance treats a company as a blocked person's property when blocked persons own enough of it. The test has three parts:
- 50 percent or more. Exactly half counts. 49.9 percent doesn't.
- In the aggregate. You add up the stakes of all blocked persons. Two designated owners with 25 percent each make a blocked company.
- Directly or indirectly. Ownership through other companies counts, as long as each link in the chain is itself blocked.
A blocked company under this rule carries the same consequences as a listed one. U.S. persons can't deal with it, and its property in U.S. hands has to be blocked and reported.
Worked examples
The arithmetic is where people slip. These examples follow the logic of OFAC's own guidance. Assume Person X and Person Y are both on the SDN list.
| Ownership structure | Is the target company blocked? | Why |
|---|---|---|
| X owns 50% of Company A | Yes, A is blocked | A blocked person owns exactly half |
| X owns 25% and Y owns 25% of Company A | Yes, A is blocked | Blocked stakes add up to 50% |
| X owns 50% of A, and A owns 50% of Company B | Yes, B is blocked too | A is blocked, so its 50% stake in B counts |
| X owns 50% of A, A owns 30% of B, X owns 20% of B directly | Yes, B is blocked | 30% plus 20% from blocked owners is 50% |
| X owns 40% of A, and A owns 100% of Company B | No, under the rule | A isn't blocked, so its stake in B doesn't count |
| X owns 49% of Company A | No, under the rule | Below the threshold, but still a red flag |
Notice the fifth row. Indirect ownership only counts through companies that are themselves blocked. You don't multiply percentages down the chain. You ask, at each level, whether the owner is a blocked person.
Control is not the same as ownership
The 50 percent rule is about ownership only. A company that a designated person controls, say as CEO or through board seats, isn't automatically blocked under this rule if their stake is below half.
That doesn't make it safe. OFAC warns that companies controlled by blocked persons may be designated later, and that you can't deal with a blocked person who acts on the company's behalf. Signing a contract with a designated executive is a problem even when the company itself isn't blocked. Plenty of teams treat significant control as a reason for enhanced review, and that's a sensible habit.
Other jurisdictions draw the line differently. The EU and the UK both look at ownership of more than 50 percent, and they also treat control as a separate trigger. If you work across borders, check each regime's own test rather than assuming the U.S. rule covers you.
What the rule means for your screening
Here's the uncomfortable part. A name search, however good, only finds names that are on a list. A company blocked by the 50 percent rule usually isn't on any list, so it will come back clean.
To cover the rule, you need two things working together:
- Screen the company and the people behind it. Collect the names of owners and key controllers during onboarding, and screen each of them, not only the company name. If an owner matches, add up the stakes.
- Know the ownership structure. Ask for it, check it against registry filings where you can, and keep a copy. If a customer won't tell you who owns them, that's information too.
The same counting applies to the Sectoral Sanctions Identifications list. Companies 50 percent or more owned by SSI entities are subject to the same directive restrictions, even though they aren't named.
Ownership changes over time
Ownership isn't fixed. A designated person can buy into a company you onboarded two years ago, and a supplier's parent can be designated next month. Keep owners and key controllers in your monitored records so they get re-screened every time the lists change, and refresh ownership details on a schedule that matches the risk.
Keep the reasoning, not just the result
When you clear a company, write down the structure you saw, the owners you screened and why the blocked stake was below 50 percent. If you're asked years later, that note is the difference between a documented decision and a guess. OFAC now expects sanctions records to be kept for ten years.
A quick checklist for corporate customers
- Screen the legal name, trading names and former names of the company.
- Collect and screen every owner with a meaningful stake, plus directors and senior officers.
- Add up stakes held by any blocked persons, directly and through blocked companies.
- Escalate anything at or near 50 percent, and anything with a designated person in control.
- Put owners and officers into ongoing monitoring, not just one-time screening.
- Save the evidence: list version, search results, ownership data and the reviewer's decision.
Where OfacScanner fits
OfacScanner screens the company name and each owner or officer you give it against the current SDN and consolidated lists, with fuzzy matching on aliases and spelling variants. It keeps those names in monitoring, raises an alert when a list update produces a new match and stores an evidence record for every check. It doesn't research ownership for you. You bring the structure, and the screening and paper trail are handled.
Ready to check a company and its owners? Start with an OFAC search and see the full list entry behind any match.