This is the most consequential piece of interpretive guidance in sanctions practice, and the most frequently misapplied.
What OFAC’s rule says
An entity is blocked if one or more blocked persons own it fifty per cent or more in aggregate, directly or indirectly. Two designated persons holding twenty-five per cent each produce a blocked entity. Ownership through intermediate companies counts.
The entity does not need to be named anywhere for this to be true, which means a screening system that only matches names will not find it.
What the rule does not say
It says nothing about control. An entity can be run entirely by a designated person, take all its instructions from them, and hold none of its shares in their name — and fall outside the automatic rule.
OFAC has been explicit that entities in which blocked persons hold a significant but non- controlling interest should be approached with caution, and that the rule is a floor rather than a safe harbour. Institutions that treated forty-nine per cent as a green light have appeared in enforcement.
Why the UK and EU answer differs
UK and EU measures catch entities that are owned or controlled by a designated person. The control limb has no percentage in it.
A structure engineered precisely to forty-nine per cent US-designated ownership may therefore be outside the automatic US rule and squarely inside the UK and EU asset freeze. Anyone reasoning about “the fifty per cent rule” as though it were a universal principle is applying one jurisdiction’s answer to another jurisdiction’s question.