The 50% rule: when ownership makes a company sanctioned

The US 50% rule

The Office of Foreign Assets Control of the US Treasury applies what is known as the 50% rule. Its guidance on entities owned by blocked persons, revised in August 2014, says that any entity owned 50% or more, directly or indirectly, by one or more blocked persons is itself considered blocked.

Three points matter:

• Aggregation: the holdings of different blocked persons are added together. Two listed persons with 25% each make the company blocked.
• Indirect ownership: ownership through other companies counts. If a blocked person owns 50% or more of company A, and company A owns 50% or more of company B, company B is blocked too.
• No list entry needed: the blocked company does not have to appear on any list. The obligation exists anyway.

The rule is about ownership, not control. A company controlled but not majority owned by a blocked person is not automatically blocked under the 50% rule, but the guidance advises caution, because dealing with it may involve the blocked person directly.

The European Union: ownership and control

EU sanctions regulations freeze funds belonging to, owned, held or controlled by listed persons and forbid making funds or economic resources available to them, directly or indirectly. In the EU guidance, ownership means holding more than 50% of the proprietary rights of an entity.

The EU also looks at control, which goes beyond shareholding. Indicators include the right to appoint or remove most members of the board, the power to exercise a dominant influence, or the ability to direct how the company uses its assets. When a listed person owns or controls an entity, making funds available to that entity is in principle presumed to be making them available to the listed person, unless shown otherwise in the specific case.

The European Commission publishes guidance and FAQs on sanctions that develop these criteria.

The United Kingdom: ownership and control

UK sanctions regulations treat an entity as owned or controlled by a designated person when that person holds more than 50% of the shares or voting rights, has the right to appoint or remove a majority of the board, or when it is reasonable to expect that the person can ensure the affairs of the entity are conducted as they wish. The Office of Financial Sanctions Implementation explains this in its financial sanctions guidance.

Why this matters for your checks

A name search answers only one question: is this company on a list? Ownership and control rules raise a second one: is anyone behind this company on a list? To answer it you need:

1. the shareholders of the counterparty and their percentages;
2. the shareholders of those shareholders, up the chain;
3. the directors and anyone with special rights over the company;
4. a sanctions check on each of these people and companies.

Public registers help, but their quality varies a lot by country. Where the chain is long, opaque or runs through jurisdictions with little disclosure, treat that as a reason to look more closely, not as a reason to stop looking.

Situations that need extra attention

• shares recently transferred to relatives or associates of a listed person;
• companies whose owners are other companies in jurisdictions with no public register;
• two or more shareholders with large stakes who are linked to the same listed group;
• a director or representative who is listed, even with a small or no shareholding.

These situations are not proof of a breach. They are signals that the counterparty deserves a deeper review before money or goods move.

The cost of getting it wrong

Dealing with a blocked company exposes you to the same penalties as dealing with a listed party. The maximum amounts set by law are shown here:

• United States, OFAC: up to $377,700 per violation or twice the value of the transaction; criminal penalties up to $1,000,000 and 20 years in prison. (source)
• United States, BIS (export controls): up to $374,474 per violation or twice the value of the transaction. (source)
• United Kingdom, OFSI: up to £1,000,000 or 50% of the value of the breach; criminal penalties up to 7 years in prison. (source)
• European Union, Directive 2024/1226: fines on companies of at least 5% of worldwide turnover or €40,000,000, and prison terms of at least 5 years. (source)
• Germany: fines on companies up to €40,000,000. (source)
• Netherlands: fines on companies up to 10% of annual turnover. (source)

Maximum amounts set by law, as published by the authorities linked, checked on October 29, 2026.

Where Unicorn Intelligence fits

Unicorn Intelligence prepares company reports with owners and directors and checks each of them against sanctions lists; new accounts receive a $50 credit.

Frequently asked questions

What is the 50% rule in sanctions?

Under US guidance, an entity owned 50% or more, directly or indirectly, by one or more blocked persons is itself blocked, even if it does not appear on any list.

Are holdings of different listed persons added together?

Under the US rule, yes: the holdings of different blocked persons are aggregated. Two blocked persons holding 25% each make the company blocked.

Does the EU also have a 50% rule?

The EU looks at ownership of more than 50% of proprietary rights and also at control, such as the power to appoint most of the board or to exercise a dominant influence.

Is control without ownership enough to block a company?

In the EU and the UK control can be enough. Under the US 50% rule control alone does not block the company, but US guidance advises caution in those dealings.

Where can I find the owners of a company?

Start with the company register of its country and any beneficial ownership register. Where data are missing or the chain is long, ask the counterparty for documents.