Outbound decision cluster: Hub · ODI FAQ · Singapore vs Hong Kong · Singapore 13O / 13U · EOR vs subsidiary · Mexico · USMCA · Personal FX · SCC data export · WFOE profit remittance · SDN 50% rule · Primary sources
What the “50% rule” is trying to solve
Under US sanctions practice, entities owned in the aggregate, directly or indirectly, 50% or more by one or more blocked persons may themselves be treated as blocked—even if the entity’s name does not appear on the SDN List. EU and other regimes use ownership and control tests that are related but not identical. Always read the operative OFAC guidance and EU FAQs for the program that applies.
Screening workflow context: sanctions & export-control screening; tracker: export control tracker; EU lens: EU sanctions & dual-use.
How to check ownership (operations checklist)
- Identify the counterparty legal entity (full name, registration number, address).
- Pull ownership layers from corporate registries, KYC packs, and customer declarations—look through holding companies.
- Aggregate ownership of listed/blocked persons across the chain (do not stop at the first 40% shareholder if another blocked person holds 15%).
- Document control indicators (board rights, vetoes, management agreements) where the regime uses control tests beyond equity.
- Escalate hits to compliance counsel before shipping, paying, or onboarding.
- Refresh on ownership changes, M&A, and periodic reviews.
Entity List vs SDN (do not conflate)
| SDN / OFAC sanctions | BIS Entity List | |
|---|---|---|
| Primary concern | Asset blocking / dealing prohibitions under sanctions programs | Export/reexport/transfer licence requirements under EAR |
| Typical question | May we deal with this person/entity at all? | What licence exception or licence is required for this item/end-user? |
| Ownership rules | 50% rule themes central | Affiliate analysis and end-user diligence still critical |
Being on one list does not automatically answer the other regime’s question. A company can face both export-control and sanctions constraints simultaneously.
“What can we still procure?” — the wrong first question
After a designation, the first tasks are classification of products/software/technology, identification of restricted end-uses/end-users, and mapping of which legal entities in the group are in scope. Only then can supply-chain teams discuss alternative sources, licence strategies, or legitimate wind-down where authorised. There is no generic public shopping list that is safe for every product.
Minimum compliance program elements
- Written screening SOP (onboarding, payments, shipping)
- Tooling plus human review for fuzzy name matches
- Ownership look-through workpapers for higher-risk corridors
- Escalation path and audit trail
- Training for sales and logistics—not only legal
Next steps
Use this page to frame questions for counsel—not as a self-filing kit. Thresholds and bank practice change.
Attribution
Reviewed by Kathrine Boer, Boer & Hendricks, LLP (Houston). Advises multinationals and Chinese outbound investors on OFAC sanctions, EAR/ITAR themes, ECCN classification, licensing and export compliance programme design. View directory profile →
Review tier: Reviewed by — accuracy review of drafts for orientation only. Content remains general information — not legal advice for a specific matter, and no attorney–client relationship is created by reading these pages.
Last reviewed: August 2026 · Related: Primary sources · Outbound decision hub.
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