The OFAC 50 Percent Rule, explained

OFAC — the US Treasury's Office of Foreign Assets Control — administers United States economic sanctions and publishes the SDN List, the list of Specially Designated Nationals and Blocked Persons. When a person or company appears on that list, US persons are generally prohibited from dealing with them and their property is blocked. The obvious move is to screen counterparties against the SDN List. The trouble is that the list names individuals and companies, and ownership can be hidden one layer below the name. That is the gap the 50 Percent Rule closes.

What the rule actually says

The principle is short. Any entity that is owned, directly or indirectly, 50% or more in the aggregate by one or more blocked persons is itself considered blocked — whether or not that entity is separately listed. The property and interests of such an entity are blocked by operation of the rule, exactly as if its name had been published. It does not need to be designated in its own right; the ownership does the work.

Two words in that sentence carry most of the weight. "In the aggregate" means that the stakes of different blocked persons are added together. "Indirectly" means ownership is traced through chains of intermediary companies, not just read off the top layer.

"In the aggregate": stakes are summed

Suppose two different blocked persons each hold 25% of a company. Neither stake reaches 50% on its own, so a naïve screen sees two minority holdings and waves the company through. Under the rule, the two stakes are added: 25% plus 25% is 50%, and the company is blocked. The aggregation applies across any number of blocked owners.

"Indirectly": ownership is traced through chains

Ownership also passes down through layers. If a blocked person owns 50% of Company A, and Company A owns 50% of Company B, then Company B is treated as 50% owned by the blocked person and is itself blocked. The chain can run through several holding companies, which is precisely how a sanctioned beneficial owner is kept off the visible paperwork.

A worked example: a vessel three layers down

Consider a tanker whose registered owner is a clean-looking single-ship company. Trace the corporate chain behind it and the picture changes.

Layer	Owner	Owns	Stake
SDN	Listed person	HoldCo	60%
HoldCo	Majority-owned by SDN	ShipCo	55%
ShipCo	Registered owner	The vessel	100%

The listed person owns 60% of HoldCo, so HoldCo is itself blocked under the rule. HoldCo in turn owns 55% of ShipCo — a majority — so ShipCo is blocked too, and the vessel it owns is caught with it. Note that the rule looks at majority ownership at each step rather than multiplying the percentages down the chain: a 50%-or-more link makes the lower entity blocked outright, and that blocked entity's own majority holdings then carry the block one layer further. ShipCo never appears on the SDN List by name. Screen only against the published list and the tanker reads as clean.

Ownership, not control

It is worth being precise about the boundary. The 50 Percent Rule is a test of ownership, not of control. A blocked person who controls an entity — through board seats, management rights or contractual influence — but owns less than 50% of it does not automatically block that entity under this rule. OFAC nonetheless cautions that dealing with entities controlled or significantly influenced by blocked persons carries real risk, and that OFAC may take action against such entities or add them to the SDN List in their own right. In other words, falling below 50% ownership is not a safe harbour; it simply means the automatic block has not triggered.

Persons whose property and interests in property are blocked pursuant to an Executive order or regulations administered by OFAC 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. OFAC Frequently Asked Question 398, US Department of the Treasury

No list to download

The hardest part of the rule, in practice, is what OFAC does not do: it does not publish a list of these majority-owned entities. They are blocked silently, by operation of the rule, even though they never appear on the SDN List. The onus is on the person doing business to perform due diligence and trace beneficial ownership for themselves. As of 2026 this remains the position — there is no master register of 50%-owned entities to screen against, only the named SDN List plus the obligation to look behind it.

Why this matters for ship screening

Shipping is built for exactly this kind of opacity. A vessel is typically owned by a single-purpose company, that company by a manager, the manager by a holding company, and so on — often across several flags and jurisdictions. A sanctioned individual or company can sit at the top of that stack, well below the visible name on the certificate of registry. Screening only the named registered owner against the SDN List misses every ship that an SDN owns 50% or more through intermediaries.

To catch them you have to do two things together: trace the beneficial-ownership chain and anchor it to something the ship cannot quietly shed. That anchor is the IMO number — the permanent seven-digit identifier that stays with a hull through every rename and reflagging. A ship that tries to evade by changing name, flag or its paper ownership keeps its IMO number, so screening on IMO plus a traced ownership graph follows it across the disguise. This is the same logic behind the wider shadow fleet and the structures used to work around the Russia oil price cap.

If you want to see how a vessel's ownership and sanctions standing line up, the quickest route is to look it up. On Marifest you can search any of 97,000+ vessels by name or IMO number and read the full file — specs, ownership chain, flag history and the screening verdict across OFAC, EU, UN and UK lists — all keyed to that one fixed number.