You screen a company. The name is clean. No hits. So you are safe, right? Not always. The company could still be off-limits. This happens when a sanctioned party owns it. The rule that covers this is the 50 percent rule. It is one of the biggest traps in screening. This guide explains the 50 percent rule in plain terms. It shows why a clean name check is not always enough. New to screening? Start with our Denied Party Screening 101 guide.
What Is the 50 Percent Rule?
The 50 percent rule comes from OFAC, the U.S. sanctions body. It says this. If a sanctioned party owns 50 percent or more of a company, that company is sanctioned too. It does not matter that the company is not named on any list. The ownership alone makes it off-limits. So a company can be blocked without ever appearing on the OFAC SDN list. You will not find it by name. You only find it by looking at who owns it.
How the Rule Works
A few points make the rule wider than it first looks.
Ownership counts, even if indirect. A blocked party can own a firm through another firm. The rule still applies down the chain.
Ownership adds up. Two blocked parties who each own 25 percent together own 50 percent. That is enough.
The blocked owner need not be named on the firm. The firm is treated as blocked by the ownership alone.
Let us make it concrete. Say a listed person owns 60 percent of Company A. Company A owns 55 percent of Company B. Both A and B are treated as blocked. Neither name may be on a list. But you still cannot deal with them.
A Simple Example
Owner
Stake in the company
Result
One sanctioned party
50% or more
Company is blocked
Two sanctioned parties
25% each (50% total)
Company is blocked
One sanctioned party
Under 50% (e.g. 40%)
Not auto-blocked, but still risky
Note the last row. A stake under 50 percent does not trigger the rule. But it is still a warning sign. A large minority owner can still have influence. Treat it as higher risk and look closer.
Why This Matters for Your Screening
Most screening tools check names. They do not map ownership. So a basic name check will miss a firm blocked under this rule. That is the gap. If you only check names, you can deal with a blocked firm by accident. And the penalty does not care that you missed it. This is why ownership is part of good screening. It matters most for higher-risk deals. Our screening best practices cover when to dig into ownership.
How to Check Ownership
You cannot spot this with a name search alone. You need to look at who owns the firm. Here is how to start.
Ask who owns the company. Get the main shareholders and their stakes.
Check the owners too. Screen each owner, not just the company.
Follow the chain. If an owner is another company, check who owns that.
Add up the stakes. See if blocked parties reach 50 percent together.
Record what you found. Note the owners and your checks.
For the full method, see our step-by-step screening process. Knowing the real parties, like the importer of record, helps too.
Frequently Asked Questions
Does the 50 percent rule apply if the company is not on any list?
Yes. That is the whole point. If sanctioned parties own 50 percent or more, the firm is blocked even without being named. You must judge it by ownership, not just the list.
What if a sanctioned party owns just under 50 percent?
The rule does not auto-block the firm. But it is still risky. A large minority owner may still hold sway. Treat it as a red flag and check further before you deal.
Do other countries have a similar rule?
Yes, several sanctions regimes look at ownership and control, though the details differ. The safe habit is the same everywhere. Check who owns and controls the party, not just the name.
Key Takeaways
The 50 percent rule blocks any firm that is 50 percent or more owned by sanctioned parties. The firm need not be on any list. Ownership can be indirect, and stakes add up. A name check alone will miss this. So check who owns the party, follow the chain, and add up the stakes. Watch large minority owners too. Start with a name check using our denied party screening tool, then look at ownership. Not sure how to trace a company’s owners? Contact the Globalior team for free trade-compliance guidance.
