The OFAC 50-Percent Rule: A Plain-English Explainer

An entity that is owned 50 percent or more, directly or indirectly, in the aggregate, by one or more persons on the OFAC Specially Designated Nationals list is itself blocked under U.S. sanctions law — automatically, by operation of the rule, and without any separate listing of the entity. The rule is short to state and structurally consequential: it makes counterparties responsible for performing the ownership calculation that determines whether the property in front of them is in fact blocked property. This methodology page is the neutral, evergreen reference that defines the OFAC 50-Percent Rule and sets out how to apply it; it is deliberately distinct from our investigative blog coverage, which examines how the rule is engineered around in specific Russian cases. For that deeper forensic treatment — with the full loophole architecture and case reconstructions — read the flagship investigation, how Russian oligarchs stay below the 50 Percent Rule threshold.

What the rule actually says

OFAC's controlling guidance is set out in Frequently Asked Questions 398–402, originally issued in their current form in OFAC's Revised Guidance of 13 August 2014.^[1] The operative text of FAQ 401 establishes the aggregation principle: "Persons whose property and interests in property are blocked pursuant to an Executive order or regulations administered by OFAC ('blocked persons') are considered to have an interest in all property and interests in property of an entity in which such blocked persons own, whether individually or in the aggregate, directly or indirectly, a 50 percent or greater interest."^[2]

Three points carry the analytic weight. First, the rule is automatic: the entity is blocked by operation of the rule, even if OFAC never lists it. Second, the rule is aggregative: if Blocked Person X holds 25 percent of Entity A and Blocked Person Y — sanctioned under any OFAC programme, not necessarily the same one — holds another 25 percent, Entity A is blocked. Third, indirect ownership counts, but only where the chain runs through intermediates that are themselves 50-percent-or-more blocked: a sanctioned person who owns 49 percent of an intermediate that owns 100 percent of a target does not, on the rule's text, block the target.

FAQ 402 sets out the corollary for divestment: if the aggregate sanctioned ownership of an entity falls below 50 percent, the entity is no longer automatically blocked, provided the divestment occurs entirely outside U.S. jurisdiction and without any U.S.-person involvement.^[3] FAQ 398 confirms that the rule applies across every sanctions programme administered by OFAC.^[4]

What the rule does not cover

The rule's text is narrower than many compliance teams assume. As originally written and as applied for the decade after 2014, it does not reach:

• Minority interests. A 49 percent holding by an SDN is, on the rule's text, not enough. The entity must still be screened against other lists and against any programme-specific restrictions, but the automatic-blocking trigger of FAQ 401 does not fire.
• Control without ownership. FAQ 401 historically stated that "OFAC's 50 Percent Rule speaks only to ownership and not to control." An entity controlled but not 50%+ owned by blocked persons was not automatically blocked. The 2025 GVA Capital action has eroded the practical force of this distinction (see below), but the formal text remains ownership-centric.
• Trusts whose beneficial-ownership chain is undocumented. The rule blocks property in which a blocked person has an "interest." Whether a trust holding satisfies that test depends on the trust deed, which is typically private. In the Kerimov case (below), Heritage Trust held more than $1 billion in U.S. assets for over four years before Treasury was able to assemble the chain.
• Future-acquired property. Blocking attaches to property in which a blocked person currently has an interest. A pre-designation divestment to a relative or associate, where the transfer is genuine and not a sham, can take the property outside the rule's reach.

How to apply the rule in practice

The following five-step procedure is what we use on counterparty reviews. The procedure is open-source and reproducible; the documentation discipline is what makes it defensible.

Edge cases that have moved markets

Kerimov / Heritage Trust (June 2022)

On 30 June 2022, the U.S. Treasury Department issued a notification of blocked property to Heritage Trust, a Delaware trust holding more than $1 billion in U.S. assets in which sanctioned Russian oligarch Suleyman Kerimov had an interest.^[5] Kerimov had been on the SDN list since April 2018. The trust had held the assets for more than four years before Treasury formally blocked them, because the chain from Kerimov to the underlying U.S. assets ran through, in Treasury's own words, "a complex series of legal structures and front persons" that no public registry exposed.

What it means for the rule's scope: the 50-Percent Rule presupposes that the counterparty can perform the calculation. Where the upper-tier entities are private trusts and where title is held by nominee LLCs, the calculation is not possible from public sources. Heritage Trust is the canonical example of the rule's structural blind spot.

Deripaska / EN+ Group, Rusal, ESCO (2018–2019)

Oleg Deripaska was added to the SDN list on 6 April 2018, along with his principal corporate vehicles. To obtain delisting of EN+, Rusal, and EuroSibEnergo — while Deripaska himself remained sanctioned — the parties restructured to reduce Deripaska's stake in EN+ from approximately 70 percent to 44.95 percent, with the surrendered 25 percentage points redistributed to a charitable trust, VTB Bank, and Glencore.^[6][7] OFAC announced its intent to delist in December 2018; delisting took effect in January 2019.

What it means for the rule's scope: 44.95 percent was engineered, not coincidental. The Deripaska restructuring is the public template for the "fragmented ownership" pattern that operates immediately below the 50-percent threshold. OFAC's delisting was conditioned on voting-trust arrangements and board-composition requirements precisely because the agency understood that ownership reduction alone did not eliminate Deripaska's influence — an early acknowledgement that mechanical application of the rule undercounts effective control.

GVA Capital control-based enforcement (2025)

OFAC's 2025 enforcement against GVA Capital Ltd. assessed a penalty of approximately $216 million in connection with managing U.S. investments linked to a sanctioned Russian oligarch.^[8] The agency declined to credit a narrow, formal-ownership reading of the rule and focused instead on the firm's actual knowledge that the underlying sanctioned person retained a beneficial interest in and exerted control over the assets.

What it means for the rule's scope: the GVA Capital action does not formally amend FAQ 401's "ownership not control" language, but it signals that knowledge-based control liability can attach even where formal ownership sits below 50 percent.^[9] Compliance teams that have historically treated sub-50-percent positions as a safe harbour should treat them, post-GVA, as a flag requiring control analysis.

The EU equivalent

The EU applies an "ownership or control" test under Council Regulation (EU) 269/2014 and elaborated in the European Commission's consolidated Russia sanctions FAQ guidance.^[10][11] The EU test captures both 50-percent-or-more ownership (mirroring the OFAC threshold) and a separate, broader control test based on indicators such as the right to appoint or remove a majority of the board, the right to exercise dominant influence under a contract, or de facto control demonstrated through other means. The EU test is, on its face, more control-aware than the OFAC rule and is operationally easier to apply to fragmented-ownership structures — though uneven member-state enforcement complicates the practical picture. For sibling-methodology reference, see our forthcoming explainer at CASP under MiCA.

Limitations of the rule

The 50-Percent Rule's loophole architecture is well-documented. Fragmented ownership below the threshold, trust interposition with opaque beneficial-ownership chains, pre-designation intra-family transfers, multi-jurisdictional layering through aligned corporate-services providers, and the use of nominee directors who are not themselves sanctioned all operate within the rule's text. The 2025 GVA Capital pivot reaches some of these patterns through control-based liability, but the bulk of the loophole architecture remains structurally available. For the full case studies and the practitioner methodology that addresses each pattern, see our flagship treatment: The 50% Rule, Examined: How Russian Oligarchs Stay Off OFAC Lists.

A note on evergreen scope: this page states the rule as of May 2026. OFAC FAQ updates, court decisions, and enforcement actions can shift the test materially — the GVA Capital action of 2025 is the most recent example. Compliance teams should treat this explainer as a baseline, not a substitute for current FAQ review.

Cross-references

Sources

1. OFAC FAQs 398–402 — Entities Owned by Blocked Persons. U.S. Department of the Treasury, Office of Foreign Assets Control.
2. OFAC FAQ 401 — The 50 Percent Rule (aggregation principle). U.S. Department of the Treasury, OFAC.
3. OFAC FAQ 402 — Divestment of blocked ownership. U.S. Department of the Treasury, OFAC.
4. OFAC FAQ 398 — Cross-programme application of the 50 Percent Rule. U.S. Department of the Treasury, OFAC.
5. U.S. Treasury Blocks Over $1 Billion in Suleiman Kerimov Trust. Press release JY0841, 30 June 2022.
6. A Breakdown of the Sanctions Deal between the United States and Oleg Deripaska. Atlantic Council.
7. Deripaska, EN+, and Rusal: A Split Decision with Implications for U.S. Sanctions. German Marshall Fund / Joshua Kirschenbaum.
8. Recent OFAC and DOJ Activity Signals Potential New Era of Control-Based Sanctions Enforcement. King & Spalding analysis of the GVA Capital action.
9. OFAC Imposes Large Russia Penalties as 2025 Comes to a Close. Lexology / law-firm commentary on GVA Capital.
10. Treasury Sanctions Russia's State-Owned Maritime Shipping Company Sovcomflot. Press release JY2121, 23 February 2024 — reference for OFAC's contemporary application of the 50-Percent Rule to state-owned shipping subsidiaries.
11. Council Regulation (EU) 269/2014. Consolidated text of the EU's principal Russia sanctions regulation, including the ownership-or-control test.
12. European Commission FAQ guidance on EU sanctions against Russia, including the consolidated guidance on the ownership-and-control test under Regulation 269/2014.
13. OFAC Revised Guidance on Entities Owned by Persons Whose Property and Interests in Property Are Blocked, 13 August 2014.