OFAC 50 Percent Rule vs UK Ownership and Control Test: A Guide for Accountants

A name on a sanctions list is the easy part. The harder question for accountants is the company that is not on the list but is owned or controlled by someone who is. The United States and the United Kingdom answer that question differently, and a client with exposure to both can end up on the wrong side of one test while passing the other. This guide compares OFAC's "50 percent rule" with the UK's ownership and control test, using the official guidance we could read, and flags what we could not confirm. It builds on our guides to sanctions screening for accountants and UK financial sanctions and OFSI reporting.

The US position: OFAC's 50 percent rule

OFAC is the US Treasury's Office of Foreign Assets Control. According to its FAQ 402, an entity that is owned 50 percent or more, directly or indirectly, in the aggregate by one or more blocked persons is itself blocked, even if the entity does not appear on the Specially Designated Nationals list. A few features matter in practice:

• Aggregation: OFAC FAQ 399 (released 13 August 2014) says stakes held by blocked persons are added together, including persons blocked under different sanctions programmes.
• Indirect ownership: FAQ 401 (13 August 2014) says ownership passes through a chain only where a blocked person owns 50 percent or more of the intermediary. A stake below 50 percent in an intermediate entity does not carry through to the entity below it.
• Control is separate: FAQ 398 (released 11 August 2020) says the rule addresses ownership, not control. An entity that a blocked person controls but does not own 50 percent of is not automatically blocked, although OFAC may designate it, and OFAC cautions firms about entities where a blocked person holds a significant stake or exercises control.
• Blocked people acting for others: FAQ 400 says dealings with a blocked individual are generally prohibited even when that individual acts for a non-blocked entity.

OFAC's FAQ 402 also covers divestments. If blocked owners reduce their combined stake below 50 percent entirely outside US jurisdiction and without US persons, the entity is no longer automatically blocked, but property that came under US jurisdiction while it was blocked stays blocked. It tells firms to confirm that a divestment really happened and is not a sham.

The UK position: ownership and control

OFSI's general guidance (section 4.1) says an entity is owned or controlled by a person if that person holds, directly or indirectly, more than 50 percent of the shares or voting rights, has the right to appoint or remove a majority of the board, or if it is reasonable to expect that the person would be able to ensure the entity's affairs are conducted in accordance with their wishes. Where the owner or controller is a designated person, the guidance says financial sanctions apply to the entity in its entirety, so its assets should be frozen. Such entities may not appear on the UK Sanctions List.

On aggregation, the guidance says OFSI would not simply aggregate different designated persons' holdings in a company unless there is a joint arrangement between them or one party controls the rights of another. It also says a minority stake does not automatically trigger sanctions, but the holder should watch for any increase above 50 percent.

Side by side

The OFAC and OFSI joint publication U.S. and UK Economic Sanctions Authorities: A Comparative Overview, dated 23 June 2026, summarises the main differences:

• Threshold: OFAC applies the rule at 50 percent or more. The UK applies it at more than 50 percent.
• Basis: OFAC's rule speaks only to ownership. The UK test also covers control.
• Aggregation: OFAC aggregates holdings across blocked persons. OFSI's ownership test does not generally aggregate separate designated persons' shareholdings, unless the structure suggests a joint arrangement or consolidated control.

An illustration, based on the rules as described above: suppose two sanctioned individuals each hold 30 percent of a company and there is no link between them. Under OFAC's rule, the combined 60 percent makes the company blocked. Under the UK ownership limb, neither holds more than 50 percent, so the company is not caught on shares alone, although the control limbs or a joint arrangement could still bring it within the UK test. A 50/50 split with one designated person is another case: 50 percent is enough for OFAC, but not "more than 50 percent" for the UK ownership limb.

A UK call for evidence on the test

The UK government published a call for evidence on the ownership and control test on 16 February 2026, and it closed on 20 April 2026. It focused on the "hypothetical control" element, meaning the wishes-based limb described above, asking how often it arises, what it costs firms to apply and what other types of control exist. The call said the government is also considering changing the ownership threshold to "50 percent or more" and adopting an aggregation model, and that neither is in place. It said it was part of delivering a commitment from the May 2025 Review of Sanctions Implementation and Enforcement. We did not find a published government response, so treat the current UK test as the one described in OFSI's guidance.

What this means for accountants

These are our suggestions, not official guidance. First, map ownership to individuals and record the percentages, including indirect holdings, so you can run both tests. Second, where a client or counterparty has US and UK exposure, apply the stricter outcome until you have taken advice. Third, do not rely on list screening alone: neither regime limits itself to named entities. Fourth, keep a written note of how you reached your conclusion. For UK relevant firms, OFSI's guidance says to inform OFSI as soon as practicable if you know or reasonably suspect that a person is a designated person, and asset-freeze breaches can lead to prosecution or a monetary penalty. Our guide to ultimate beneficial ownership explains how to trace owners in the first place.

What we could not confirm

• We read OFSI's general guidance only as far as its first 100,000 characters, which includes the ownership and control section but not later sections such as enforcement detail.
• We did not read the text of the UK sanctions regulations or OFAC's regulations themselves, only official guidance and FAQs.
• We did not review EU or Irish ownership and control rules, which differ again, or US licensing and penalty amounts.
• We did not find a published response to the UK call for evidence, so the UK test may have changed since this was written.

Frequently asked questions

Does the US rule apply to control?

Not automatically. OFAC FAQ 398 says the rule is about ownership, though OFAC can designate controlled entities separately.

Does the UK add up holdings of different sanctioned people?

Not simply. OFSI's guidance says it would not aggregate them unless there is a joint arrangement or one party controls the other's rights.

Where can I find training on sanctions compliance?

See our CPD courses for accountants and finance professionals.