Revised OFAC Guidance On "Shadow" SDNs

OFAC expands the scope of its 50% rule.

On August 13, the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) issued "Revised Guidance on Entities Owned by Persons Whose Property and Interests in Property Are Blocked." This guidance significantly changed OFAC's so-called "50% rule."¹

The guidance introduces at least four policies that are further explained in newly issued OFAC Frequently Asked Questions (FAQs) #398–402, which can be found on OFAC's FAQ website.

The New Policies

• OFAC will henceforth aggregate the ownership interests of separate OFAC Specially Designated Nationals (SDNs) in any one entity, and, if the aggregated SDN ownership interests in such entity equal or exceed 50%, OFAC will deem the entity to be a "shadow" or "deemed" SDN. Thus, an entity that is not expressly named on OFAC's SDN list may become a "deemed" SDN because of its collective SDN owners' equity holdings and will be just as "off limits" to U.S. Persons as