What is the OFAC 50% Rule?
An OFAC policy that treats any entity owned 50% or more (directly or indirectly) by a sanctioned person as itself sanctioned, even if not explicitly listed.
Plain-English Summary
Why This Matters
Sanctioned individuals routinely attempt to evade restrictions by operating through corporate vehicles, holding companies, or intermediaries where they hold a majority ownership stake. Without ownership traversal, a compliance program could approve a transaction with what appears to be a clean counterparty while in fact benefiting a sanctioned party. The 50% Rule extends sanctions coverage to close this evasion pathway.
Explanation Depth
Concept Explanation
Just checking a company name on a sanctions list is not always enough. If a sanctioned person owns more than half of a company, that company is also considered off-limits — even if its name is not on the list. The 50% Rule requires looking at who actually owns the company, not just the company name itself.When You'll See This in SecurePoint
SecurePoint's Ownership Screening feature (under BIS Ownership Screening in the nav) performs ownership traversal. The OFAC 50% Rule traversal currently operates in shadow mode: results are surfaced for analyst review but do not automatically block transactions. Manual adjudication is required for confirmed ownership-chain hits.
What You Should Do Next
When screening a corporate entity, check beneficial ownership data to identify whether any natural person or entity on a sanctions list owns 50% or more of the counterparty, either directly or through a chain of ownership. If a match is found, treat the entity as sanctioned and halt the transaction pending legal review.
What Can Go Wrong
Sources & References
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