General Note on the Distinction Between Blocked Person "Control" Over Property and "Control" over the Assets of a Company Controlled by a Blocked Person; The 50% Rule as a Safe Harbor

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TURBOFAC Commentary (2077 words)

General Note on the Distinction Between Blocked Person "Control" Over Property and "Control" over the Assets of a Company Controlled by a Blocked Person; The 50% Rule as a Safe Harbor

The 50% rule has a complex relationship with both the basic blocking provisions that it interprets, as well as OFAC’s statutory authority to regulate transactions subject to U.S. jurisdiction. The below clarifies that relationship, especially as it relates to the status of assets of corporations “controlled” by blocked persons.

i) THE 50% RULE IN THE CONTEXT OF THE SCOPE OF OFAC’S STATUTORY AUTHORITY

The basic blocking regulation that the 50% rule interprets provides that "property and interests in property” of blocked persons are blocked. While the typical EO and blocking provision found in the CFR blocks all "property and interests in property"...