What is OFAC's 50 Percent Rule?

Any entity owned 50% or more, directly or indirectly, by an SDN-listed person is itself designated. You must screen beneficial owners to identify indirect SDN ownership.

Who counts as a beneficial owner?

Under the Corporate Transparency Act, anyone who owns 25%+ of an entity or exercises substantial control. OFAC's 50 Percent Rule applies to ownership.

How often should I rescreen beneficial owners?

At minimum quarterly, and immediately after major SDN list updates.

Do AI agents need to screen beneficial owners?

Yes. AI agents onboarding corporate counterparties should screen company names AND beneficial owners against OFAC SDN.

How to screen beneficial owners for sanctions

Beneficial owner screening is required under OFAC's 50 Percent Rule and the Corporate Transparency Act. Any entity majority-owned by a designated person is itself blocked.

TL;DR: You cannot stop at screening company names. You must identify and screen every individual who owns 25% or more of a corporate counterparty.

Step 1: Identify the beneficial owners

Request the corporate ownership structure from your counterparty. Under the Corporate Transparency Act (effective 2024), most US entities must report beneficial owners to FinCEN.

Step 2: Screen each owner against OFAC SDN

Use fuzzy name matching, not exact match. Sanctioned individuals often use transliteration variants and aliases.

Step 3: Check for indirect ownership

Trace the ownership chain through holding companies. An SDN owning 51% of Company A, which owns 51% of Company B, means Company B is blocked through indirect ownership.

Ownership threshold	Action
25% or more	Screen individual against OFAC SDN
50% or more (combined SDN ownership)	Entity is BLOCKED under 50 Percent Rule
Substantial control (CEO, CFO, board)	Screen individual against OFAC SDN

Common gap: Screening the direct counterparty but not the parent company or ultimate beneficial owner. If an SDN owns the parent, the subsidiary is blocked.

Step 4: Document and periodically rescreen

Record the ownership structure, screening date, and results. Rescreen quarterly at minimum.

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Frequently Asked Questions

What is OFAC's 50 Percent Rule?: Any entity owned 50% or more, directly or indirectly, by an SDN-listed person is itself designated. You must screen beneficial owners to identify indirect SDN ownership.
Who counts as a beneficial owner?: Under the Corporate Transparency Act, anyone who owns 25%+ of an entity or exercises substantial control. OFAC's 50 Percent Rule applies to ownership.
How often should I rescreen beneficial owners?: At minimum quarterly, and immediately after major SDN list updates.
Do AI agents need to screen beneficial owners?: Yes. AI agents onboarding corporate counterparties should screen company names AND beneficial owners against OFAC SDN.