398. Does OFAC consider entities over which one or more blocked persons exercise control, but of which they do not own 50 percent or more in the aggregate, to be blocked pursuant to OFAC’s 50 Percent Rule?
No. OFAC’s 50 Percent Rule speaks only to ownership and not to control. An entity that is controlled (but not owned 50 percent or more) by one or more blocked persons is not considered automatically blocked pursuant to OFAC’s 50 Percent Rule. OFAC may, however, designate the entity under an available sanctions criteria or otherwise identify the entity as blocked property if determined to be controlled by one or more designated persons and add the entity to OFAC’s List of Specially Designated Nationals and Blocked Persons (SDN List).
OFAC urges caution when considering a transaction with an entity that is not a blocked person (a non-blocked entity) in which one...
Notes:
1) Concerning the proposition that entities "controlled" by SDNs are not blocked without an affirmative determination, see e.g. OFAC SpaceX Litigation Correspondence (2014) and OFAC # 368. In dealing with such entities, one must avoid "indirect dealings" with SDNs.
2) Apart from the fact that all Cubans are blocked under the CACR (unless unblocked by GL), note that entities owned or controlled by the blocked governments of Iran, North Korea and Syria are also blocked by operation of law, i.e. without an affirmative determination. See e.g. Case No. IA-2013-302020-1, analyzing the question of whether an entity is "controlled" by the GOI.
3) Although OFAC had not stated this clearly until relatively recently, and a civil enforcement action had not been based...