The OFAC 50 percent rule with worked examples
OFAC's 50 percent rule says that any entity owned 50 percent or more, directly or indirectly, in the aggregate, by one or more blocked persons is itself blocked, whether or not it appears on the SDN list (OFAC 2014 guidance, OFAC FAQ 91). The rule counts ownership, not control (OFAC FAQ 398), and it adds together stakes held by different blocked persons, even under different sanctions programs (OFAC FAQ 399). A name search alone cannot find these companies. The worked examples below are OFAC's own.
Aggregation: two minority owners can block a company
Blocked Person X owns 25 percent of Entity A and Blocked Person Y owns another 25 percent. Entity A is blocked, because it is owned 50 percent or more in the aggregate by blocked persons (OFAC FAQ 399).
Indirect ownership
OFAC counts ownership held through another entity only when that intermediate entity is itself 50 percent or more owned by blocked persons (OFAC FAQ 401). OFAC's examples, restated:
| Example | Ownership | Blocked? | Why (per OFAC) |
|---|---|---|---|
| 1 | X owns 50% of A; A owns 50% of B | B is blocked | A is blocked by X's 50%; A's 50% of B then blocks B |
| 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% of C through two blocked entities |
| 3 | X owns 50% of A and 10% of B; A owns 40% of B | B is blocked | X's 10% direct plus 40% indirect through blocked A makes 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 nothing passes through B; X's indirect total is 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 nothing passes through either |
The difference between examples 2 and 4 is the whole rule in miniature: ownership flows through an intermediate company only if that company is itself blocked.
Control is not ownership, but be careful
An entity controlled by blocked persons, but not 50 percent owned by them, is not automatically blocked. OFAC still urges caution: such companies may be designated later, and you must not deal with a blocked person acting for one, for example by signing a contract a blocked individual signs on its behalf (OFAC FAQ 398, OFAC FAQ 400).
What to ask a business customer
OFAC urges due diligence on entities in a transaction to determine relevant ownership stakes (OFAC FAQ 401). For a fleet buyer, an entity buyer at closing or a foreign customer, that means:
- Get the ownership chart down to the people, with percentages.
- Screen every owner, person and company, against the SDN list.
- For any blocked owner, add up its direct and indirect stakes as in the table.
- Keep the chart, the screening results and your arithmetic in the file.
OFAC requires records of each transaction subject to its rules for at least 10 years (31 CFR 501.601).
The same idea is coming to export controls
From 10 November 2026, a Commerce Department rule applies a similar 50 percent test to affiliates of parties on the Entity List and Military End-User List. See the BIS Affiliates Rule returns 10 November 2026.
Screen each owner
Run a free OFAC check on each owner in the chart against the current SDN and Consolidated lists. This is screening data, not legal advice.