OFAC Issues Revised Guidance on Aggregation of Ownership Interests

On August 13, 2014, the US Treasury Department’s Office of Foreign Assets Control (OFAC) issued revised guidance with respect to the “50% Rule,” which established that an entity owned 50% or more, directly or indirectly, by a blocked party would be considered blocked by operation of law. The revised guidance establishes that aggregated ownership interests in an entity that total 50% or greater by one or more blocked persons are sufficient for that entity to be blocked by operation of law. OFAC also indicates that this revised guidance will be applied, as described below, to entities designated on the List of Specially Designated Nationals and Blocked Persons (SDN List) as well as entities included on the Sectoral Sanctions Identification List (SSI List).

Background on OFAC’s 50% Rule -

The SDN List is a list of parties designated pursuant to Executive Orders or regulations administered by OFAC. All property and interests in property of any party on the SDN List in the possession or control of a US Person,1 or within the United States, is considered blocked and may not be dealt in.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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