Preface to FAQs 398-402.
Entities Owned by Persons Whose Property and Interest in Property are Blocked (50% Rule)
These Frequently Asked Questions (FAQs) respond to inquiries received by the Department of the Treasury’s Office of Foreign Assets Control (OFAC) relating to the status of entities owned by individuals or entities whose property and interests in property are blocked under Executive orders and regulations administered by OFAC (blocked persons). These FAQs provide additional clarity regarding revised guidance that OFAC issued on August 13, 2014, which can be found on OFAC’s website here, amending earlier guidance that had been issued on February 14, 2008 (OFAC’s 50 Percent Rule). The revised guidance states that the property and interests in property of entities directly or indirectly owned 50 percent or more in the aggregate by one or more blocked persons are considered blocked regardless of whether such entities appear on OFAC’s Specially Designated Nationals and Blocked Persons List (SDN List) or the annex to an Executive order. The revised guidance expands upon the earlier guidance by addressing entities owned 50 percent or more in the aggregate by more than one blocked person.*
For the purposes of clarification, see specific FAQs below. If you require additional guidance with respect to the application of OFAC’s 50 Percent Rule, you may contact OFAC and submit information pertaining to the specific facts and circumstances. [10-31-2017]
*OFAC also applies a 50 percent rule to entities on the Sectoral Sanctions Identifications List (SSI List) created in July 2014 in the Ukraine-/Russia-related sanctions context. The property and interests in property of persons on the SSI List (and entities owned 50 percent or more in the aggregate by one or more persons subject to the SSI List restrictions) are not required to be blocked; instead a more limited set of transaction restrictions applies to them. In the context of the SSI List restrictions, therefore, these FAQs can be used to identify which subordinate entities are subject to the SSI List restrictions only and are not meant to suggest that any additional actions (such as blocking) apply to those entities. The references to “33 percent or greater ownership” and “ownership of a majority of the voting interests” in Directive 4, as amended on October 31, 2017, do not change the applicability of OFAC’s 50 percent rule in the Directive 4 context. For additional information, see FAQs 373, 537, and 538.
1) See FAQ 415 and notes thereto re: aggregation across SSI directives.