Can an unlisted company still be blocked?
A company’s owners can matter as much as its name.
A company can be absent from the SDN List and still be blocked. You also need to know who owns it and in what proportions. OFAC’s 50 Percent Rule addresses this question.
The rule in plain language
An entity is blocked when one or more blocked persons own 50% or more of it, directly or indirectly, in the aggregate—even without a separate listing. A blocked person is an individual or entity whose property and interests in property are subject to blocking.[05][06]
Exactly 50% meets the threshold; it need not be more than 50%. Combine the relevant stakes of blocked persons, including those blocked under different programs.[05]
What if two blocked owners each hold 25%?
Blocked X and blocked Y each own 25% of A. Their combined 50% blocks A. Checking each owner separately would miss the aggregate stake.[05]
How does ownership through another company work?
Blocked X owns 50% of A, so A is blocked. A owns 50% of B, so B is also blocked. Determine A’s status before examining its stake in B. Multiplying the two percentages to 25% would give the wrong blocking result.[06]
Can direct and indirect holdings add up?
Blocked X owns 50% of A, making A blocked. X also directly owns 10% of B, while A owns 40% of B. Those relevant holdings combine to 50%, so B is blocked. All letters represent hypothetical parties.[06]
Does control mean ownership of 50%?
Ownership
The rule concerns ownership. Direct or indirect aggregate ownership of at least 50% by blocked persons triggers blocking.
Control
For example, influence over management with aggregate ownership below 50% does not by itself automatically block the entity under this rule.
That does not clear a transaction. The entity may be designated separately or subject to other restrictions. Dealings with a blocked person acting for the company, such as signing a contract, also need examination.[07]
Do not apply the blocking rule indiscriminately to all non-SDN lists. Some sectoral directives extend their restrictions to owned entities; the particular directive’s restrictions extend, not full blocking by default.[08]
What can a company-name search miss?
A name search usually does not give you a company’s full ownership structure. The 50 Percent Rule also requires knowing who owns it, how much they own, and whether another company sits in between.
- Who are the company’s owners, and how much does each own?
- If an owner is another company, who owns that company?
- Are the ownership details current, and are any owners subject to blocking?
You may need company records or documents from the business to answer these questions. If the details are incomplete, an empty name search cannot establish that the company is unrestricted. Complex ownership needs further checking.[06]