US-owned or controlled foreign entity definition

US-owned or controlled foreign entity

A company organised outside the United States but owned or controlled by US persons, which some sanctions programmes treat as bound by the same prohibitions as a US person.

also known as

foreign subsidiary of a US person

reviewed

2026-10-02

Cite this page

APA 7

Sanctions Evasion Reference. (2026, October 2). US-owned or controlled foreign entity. https://sanctionsevasion.org/reference/glossary/us-owned-or-controlled-foreign-entity/

Chicago

Sanctions Evasion Reference. “US-owned or controlled foreign entity.” Last reviewed October 2, 2026. https://sanctionsevasion.org/reference/glossary/us-owned-or-controlled-foreign-entity/.

BibTeX

@misc{ser-reference-glossary-us-owned-or-controlled-foreign-entity,
  author = {{Sanctions Evasion Reference}},
  title  = {US-owned or controlled foreign entity},
  year   = {2026},
  note   = {Last reviewed 2026-10-02},
  url    = {https://sanctionsevasion.org/reference/glossary/us-owned-or-controlled-foreign-entity/}
}

The date is when this page was last reviewed, not when it was first published.

OFAC says that “in certain sanctions programs, foreign entities owned or controlled by U.S. persons also must comply with applicable restrictions.” The 2024 Tri-Seal Compliance Note cites three examples: 31 CFR 560.215, which bars foreign persons owned or controlled by a US person from transactions with the Government of Iran or anyone subject to Iranian jurisdiction; 31 CFR 515.329, which extends the Cuba prohibitions to any organisation owned or controlled by US persons wherever organised; and 31 CFR 510.214 for certain North Korea measures.

This is why a Colombian freight forwarder bought by a Delaware company became bound by the Cuba rules the day it was bought (Key Holding), and why Unicat’s use of its Dutch affiliate to fill Iran orders was itself charged as facilitation (Unicat). See how US sanctions reach companies outside the United States.

Where this term is used

What is third-country transshipment? — Routing restricted goods through an intermediate country so that the shipment reaching the restricted destination appears to originate somewhere the exporter would have supplied without question.
How do gaps in acquisition integration create sanctions exposure? — A company buys a foreign business and keeps running its systems separately, so the acquired unit's transactions never pass through the parent's sanctions screening until someone thinks to connect them.

Related terms

Facilitation — Approving, financing, guaranteeing, brokering or otherwise assisting a transaction by a foreign person that the assisting party could not lawfully perform itself.
Secondary sanctions — Measures that threaten non-US persons with loss of access to the US market or financial system if they engage in specified dealings with sanctioned parties.
The 50 percent rule — OFAC guidance that any entity owned fifty per cent or more, directly or indirectly, by one or more blocked persons is itself blocked, whether or not it is named.

Sources

Tri-Seal Compliance Note: Obligations of foreign-based persons to comply with U.S. sanctions and export control laws. U.S. Departments of Commerce, the Treasury (OFAC) and Justice, 2024. Applicability of U.S. Sanctions and Export Control Laws to Foreign-Based Persons; OFAC Enforcement Actions Against Foreign Persons; 6 March 2024.

Iranian Transactions and Sanctions Regulations, 31 CFR Part 560. U.S. Department of the Treasury, Office of Foreign Assets Control, 2026. 31 CFR 560.215 (foreign entities owned or controlled by US persons).

Cuban Assets Control Regulations, 31 CFR Part 515. U.S. Department of the Treasury, Office of Foreign Assets Control, 2026. 31 CFR Part 515; issued 9 July 1963 (28 FR 6974).