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The OFAC 50% Rule: When Government Lists Are Not Enough

White Paper Published By: Factiva
Published:  Dec 01, 2015
Type:  White Paper
Length:  4 pages

When compliance managers think about the good old days, they do not have to look back too far. In fact, prior to 2008, the world was a much simpler place: the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) published a list of sanctioned companies and individuals, and as long as their company was not doing business with any person on that list, they seemed to be in good shape. This was definitely not an easy task. However, after 2008, it became more complicated when OFAC guidance stated that an ownership interest of 50% or more by a sanctioned subject was blocked or otherwise limited.

Flash forward to August 2014 and compliance gets even more challenging. Revised guidance requires that businesses stay away from or limit their engagement with entities where subjects on the OFAC list have a 50% or greater ownership interest individually or in the aggregate. The catch: OFAC was not going to aggregate those interests or proactively publish them on any list. This new requirement necessitates a significant amount of research to map these holdings, which is something that most compliance departments and list providers do not have the resources to do. It also requires experience to conduct due diligence in multiple
languages given the global nature of such holdings.

Tags : 
compliance, ofac, sanction, finance

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