Aggregating holdings across several listed persons: OFAC and EU compared

A mid-sized European trading group is finalising an acquisition. Its compliance team screens the target's shareholders against the SDN List (OFAC's list of Specially Designated Nationals and blocked persons) and the EU consolidated asset-freeze list. No individual shareholder appears. The deal moves toward signing. Then a second-pass review surfaces something the first pass missed: three shareholders, none of whom is listed individually, together hold a controlling economic stake – and two of them are connected, through intermediate holding structures, to a person who is listed. The question is no longer whether the target is clean. The question is whether aggregating those holdings across several listed persons captures the target under OFAC, under the EU, or under both regimes simultaneously.

Aggregating holdings across several listed persons – the analysis of whether combined ownership stakes held by multiple blocked or designated persons reach the threshold that treats a non-listed entity as itself blocked – is one of the most technically demanding areas of sanctions compliance for cross-border businesses. Under OFAC, the 50 percent rule (OFAC's rule treating entities owned 50 percent or more in the aggregate by one or more blocked persons as themselves blocked) is mechanical: it is triggered by ownership percentage alone, with no separate control inquiry. The EU applies a comparable ownership criterion but adds a separate control test, meaning that a target can be caught even where no listed person reaches the ownership threshold. 50 percent or more, in the aggregate, is the OFAC trigger; the EU adds a qualitative control analysis that sits alongside it.

This analysis runs a single cross-border fact pattern through both regimes in sequence, maps where the tests converge and where they diverge sharply, and identifies the risk flags that a business operating across both jurisdictions must address before it transacts.

The scenario: a target with a fragmented, partially connected ownership chain

A freight and logistics business with operations in both the United States and the European Union is conducting pre-acquisition due diligence on a target company. The target's registered shareholders include six legal entities, none of which appears on either the OFAC SDN List or the EU consolidated asset-freeze list. However, a deeper ownership trace reveals the following: one intermediate holding entity is wholly owned by a person on the SDN List; a second intermediate entity is 35 percent owned by a different SDN-listed person and 20 percent owned by a third SDN-listed person; a sixth shareholder, not itself listed, is controlled – through board appointment rights and contractual veto powers – by an EU-designated individual who does not appear on the OFAC SDN List.

None of these facts appears in a standard name-screening run. All of them matter. The scenario illustrates the central tension in cross-border sanctions compliance: name screening identifies listed persons, but the legal prohibitions extend well beyond the listed persons themselves to entities they own or control. The practical question – which entities are captured, under which regime, and through which test – is what this analysis addresses.

As of January 2026, both OFAC and the EU have issued guidance and, in the EU's case, had their positions tested before the courts. The rules are not identical. Operating under the assumption that they are is one of the most common – and most costly – compliance failures we encounter.

How does OFAC apply the 50 percent rule to multiple listed persons?

Under OFAC's guidance, the 50 percent rule requires aggregation across all blocked persons who together hold an ownership interest in the same entity, regardless of whether those persons are connected to each other. The test is binary and mathematical: if blocked persons own, directly or indirectly and in the aggregate, 50 percent or more of an entity, that entity is itself treated as blocked. No licence is needed to conclude that it is blocked; no intent, knowledge, or control inquiry is required.

The word "indirectly" is load-bearing. Ownership that runs through one or more intermediate entities – none of which may itself be listed – still counts. If a listed person owns 100 percent of Company A, and Company A owns 30 percent of the target, the listed person's indirect stake in the target is 30 percent. If a second listed person separately owns 25 percent of the target directly, the aggregate is 55 percent, and the target is blocked.

Aggregation across unconnected listed persons is perhaps the most misunderstood element of the rule. Many compliance programmes test whether any single blocked person exceeds the threshold. That is necessary but not sufficient. A target with six shareholders, two of whom are on the SDN List at 28 percent each, is captured by the rule even though neither shareholder alone is over the line. In our experience, automated screening tools configured to flag only individual hits will produce a clean result in this pattern while the underlying legal exposure is significant.

The OFAC position is set by guidance under IEEPA and applies across all OFAC programmes where the SDN designation produces a blocking effect. Specific programme rules may vary; the guidance should be read alongside the relevant programme-specific regulations. US persons who engage in any transaction with an entity that is blocked by operation of the 50 percent rule – even without actual knowledge that the entity is blocked – expose themselves to strict-liability civil penalties.

How does the EU ownership-and-control test work, and where does it diverge from OFAC?

The EU asset-freeze regime extends to non-listed entities owned or controlled by a designated person; the ownership criterion is more than 50 percent, and the control criterion is a separate, qualitative inquiry that can capture an entity even where no listed person holds more than 50 percent of its shares. This is the first and most important structural difference between the two regimes.

Under the EU test, "control" is not defined solely by percentage ownership. It can arise from contractual rights, board appointment powers, veto rights over material decisions, or the practical ability of a designated person to direct the entity's affairs. EU court jurisprudence, including judgments of the EU General Court and the Court of Justice, has confirmed that control must be established by objective and sufficiently weighty evidence, but that it can be inferred from a combination of structural and functional factors rather than requiring a single definitive instrument.

Returning to the scenario: the sixth shareholder – not itself listed, controlled through board appointment rights and veto powers by an EU-designated individual – would not trigger the OFAC 50 percent rule because no blocked person owns 50 percent or more of the target through that chain. Under the EU test, however, the question is whether the designated individual exercises control over that shareholder, and through it over the target. If the answer is yes, the target may itself be subject to the EU asset-freeze even without any listed person holding a majority stake.

A second divergence concerns the identity of the designated persons. OFAC and the EU do not list identical persons. A person on the EU consolidated list may not appear on the OFAC SDN List. In the scenario, the EU-designated individual who controls the sixth shareholder is not on the OFAC SDN List. For a US person or a US-nexus transaction, that individual's EU designation is structurally irrelevant to the OFAC analysis. For an EU operator, it is highly relevant. A business with counterparties subject to both regimes must run two separate analyses, not one.

The EU's asset-freeze prohibitions extend not only to funds and assets held by a designated person, but to making funds or economic resources available, directly or indirectly, to or for the benefit of listed persons or entities they own or control. The "benefit" limb is broader than a simple ownership chain. We regularly advise clients on whether a proposed transaction structure – even one designed entirely within the law – inadvertently routes economic benefit to a designated person through an entity that passes first-pass screening.

Running the fact pattern: where each regime reaches a different result

Applying both tests to the scenario produces results that diverge in important ways, and the divergence determines which transactions are prohibited, for whom, and under which conditions.

Under OFAC: the first intermediate holding entity is wholly owned by a person on the SDN List. If that entity holds, say, 15 percent of the target, the listed person's indirect stake is 15 percent. The second intermediate entity is 35 percent owned by one SDN-listed person and 20 percent owned by another; combined SDN ownership of that entity is 55 percent, so that entity is itself blocked by operation of the 50 percent rule, as currently in force. If that blocked intermediate entity in turn holds, say, 40 percent of the target, the blocked person's indirect stake in the target includes the full 40 percent held by the blocked intermediate entity. Added to the 15 percent from the first chain, the aggregate is 55 percent. The target is blocked under OFAC. A US person may not transact with it without a licence.

Under the EU: the analysis for the first two ownership chains runs similarly, because the EU ownership threshold is also more than 50 percent and the same persons may or may not be designated on the EU list. Assume, for the purpose of this analysis, that both SDN-listed persons also appear on the EU consolidated list. The EU analysis reaches the same conclusion for those chains: the intermediate entity with combined EU-designated ownership above 50 percent is itself subject to the asset-freeze, and the target, held more than 50 percent indirectly through that entity and the first chain, is also captured.

The EU analysis then adds a dimension OFAC does not: the sixth shareholder. Even if the sixth shareholder's stake in the target is only 5 percent – well below any ownership threshold – the EU control test asks whether a designated person controls the sixth shareholder. Board appointment rights and contractual veto powers over material decisions are precisely the kind of objective, weighty evidence EU courts have accepted as proof of control. If control is established, the sixth shareholder is caught by the EU asset-freeze, and any transaction that benefits it – or that makes funds available to it – is prohibited for EU operators.

The result: under OFAC, the target is blocked on ownership grounds. Under the EU, the target is blocked on the same ownership grounds, and the sixth shareholder is separately caught on control grounds. An EU operator has a wider set of prohibited counterparties in this transaction than a pure US-nexus analysis would reveal. Is your compliance programme structured to surface both results, not just one?

Where do the practical risk flags arise in a multi-listed-person structure?

The scenario is not exotic. Multi-layered ownership structures with several minority listed-person interests are common in transactions involving markets or sectors where designated persons have historically been active investors. The risk flags that practitioners need to identify early are the ones that convert a routine due-diligence exercise into a blocked-property problem.

The first risk flag is the aggregation gap. A compliance programme that tests each listed-person holding individually, rather than aggregating all listed-person holdings, will report the structure as clean when it is not. This is the screening gap that surfaces only after a breach – the audience pain this analysis addresses directly. The fix is a structured ownership mapping exercise, not a list lookup. We have acted for several financial institutions that discovered this gap during post-acquisition integration, after the completion of a transaction that could not be unwound.

The second risk flag is indirect ownership through a non-listed intermediate. Screening the immediate shareholders of the target is the minimum, not the maximum, required. The 50 percent rule aggregates indirect holdings. If the compliance team does not trace the full ownership chain – to the ultimate beneficial owner – it is not performing the analysis the rule requires. A blocked intermediate entity is not flagged by name screening; it is flagged by ownership mapping.

The third risk flag is the control dimension under the EU. Veto rights, board appointment powers, and contractual governance rights that give a designated person practical authority over an entity's decisions are material facts. They do not show up on a company registry extract and they are not captured by any automated screening tool. They require contractual and governance review.

The fourth risk flag is list divergence. OFAC and the EU do not maintain identical lists. A transaction that is clean for US purposes may be prohibited for EU purposes and vice versa. For a business operating under both regimes – or for a transaction with both US-nexus and EU-nexus elements – the analysis must be conducted separately under each regime.

The fifth risk flag is the "benefit" extension under the EU. Even where the immediate counterparty is not listed and does not breach the ownership or control threshold, a transaction may still be prohibited if it makes economic resources available, directly or indirectly, for the benefit of a listed person. Structuring a transaction to route payments through a clean intermediary does not itself resolve this question; the substance of who benefits is what the prohibition addresses.

What does a defensible cross-border aggregation analysis require?

A defensible analysis of aggregating holdings across several listed persons for a cross-border transaction requires more than a name screen. It requires a structured, documented process that addresses each element of each regime's test separately and reaches an explicit conclusion before the transaction completes.

The first step is a full ownership and control map. This means tracing all ownership layers to the ultimate beneficial owner level, documenting each intermediate entity and its ownership percentage, and identifying any contractual governance rights that could establish control in the EU sense. Company registry data is the starting point. It is not the end point. Shareholder agreements, constitutional documents, and side letters all carry material information.

The second step is a separate aggregation analysis under each applicable regime. The OFAC analysis asks: do blocked persons, in the aggregate and across all ownership chains, hold 50 percent or more of the target, directly or indirectly? The EU analysis asks the same question for EU-designated persons, and then separately asks: does any EU-designated person exercise control over the target or any entity in the ownership chain?

The third step is to check list divergence. The persons who are designated under OFAC are not always designated under the EU and vice versa. A specific person's designation status must be checked against each relevant list, not just the first one that returns a result.

The fourth step is to assess the "benefit" and "indirect availability" dimension under the EU for any transaction that would not be blocked on ownership or control grounds alone. This is a more contextual analysis and typically requires legal judgment rather than a mechanical application of thresholds.

The fifth step is to document the analysis. Where a transaction proceeds despite a surface-level concern – for example, where several listed-person holdings aggregate to, say, 38 percent, below the threshold but not immaterial – the conclusion must be reasoned, not bare. Regulators assessing a subsequent query expect to see that the analysis was conducted thoroughly, not just that a box was ticked. Records should be retained for the period required under the applicable regime, which under OFAC is five years, as currently in force.

In a recent matter, a manufacturing group preparing a joint-venture structuring exercise discovered, during the ownership mapping phase, that two prospective partners together held, through separate chains, a combined indirect stake in the proposed joint-venture vehicle that approached the OFAC threshold. Neither partner appeared on any list. Both were ultimately owned, at several removes, by persons who were. We conducted the aggregation analysis under both OFAC and the EU regime, mapped the control position for EU purposes, and advised on a restructuring of the ownership architecture that addressed the exposure before the joint-venture documents were executed. The matter required legal judgment at each step; no automated tool produced the conclusion.

The myth of name-screening sufficiency: when list lookups are not enough

The most persistent misconception in cross-border sanctions compliance is that conducting a name screen against the major lists constitutes a complete sanctions check. It does not. Name screening is a necessary first step. It is not a complete control.

The 50 percent rule, and the EU control test, both operate in a space where no listed person's name appears on the immediate counterparty. The entity you are transacting with may be entirely clean on every list. The question the rules ask is different: who owns it, and do those owners, in the aggregate, include persons who are blocked or designated? The answer to that question is not available from a name screen of the counterparty. It is available only from an ownership and control analysis that goes behind the counterparty to its ultimate owners.

Sanctions screening obligations attach on a risk basis. "We screened the name" is not, by itself, a complete control. Regulators on both sides of the Atlantic have been explicit on this point. A financial institution that screens counterparty names without conducting ownership analysis for higher-risk relationships has not satisfied its sanctions compliance obligations.

There is a practical dimension to this as well. The entities that are most likely to be blocked by operation of the 50 percent rule, or caught by the EU control test, are precisely the entities whose names will not appear on any list. They are, by definition, the entities a name screen cannot find. Compliance programmes that rely exclusively on name screening have a structural blind spot that targets the most consequential category of prohibited counterparties.

We regularly advise compliance teams on how to address this gap without creating a process so burdensome that it makes ordinary commercial operations impractical. The answer is risk-stratification: enhanced ownership analysis for higher-risk counterparties, standard screening for lower-risk ones, and clear documented criteria for which treatment applies. That structure is defensible; a one-size-fits-all name-screen-and-move-on approach is not.

Cross-border divergence: when OFAC and EU reach different conclusions for the same deal

The scenario demonstrates that OFAC and the EU can reach different conclusions about the same ownership structure. This is not a rounding error or an edge case; it is a structural feature of two independent regimes with different legal instruments, different list populations, and different tests for non-listed entity capture.

For a business operating in both jurisdictions – or for a transaction that has both US-nexus and EU-nexus elements – the divergence creates a practical problem. The business must comply with both regimes. It cannot net the two analyses out or apply whichever regime's result is more favourable. Where two regimes both apply, the stricter prohibition governs the conduct of a person subject to both. If the transaction is prohibited under the EU because of a control finding, an EU-regulated party to the transaction cannot proceed, regardless of the OFAC result.

The divergence also creates information-management questions. A legal analysis prepared under OFAC will not be sufficient to satisfy an EU regulator reviewing the same transaction. The two analyses are separate documents, applying separate tests, to separate lists, under separate legal authority. In our cross-border practice, we regularly prepare parallel analyses – one for US counsel and one for EU purposes – for the same transaction, because the conclusions are independently required and cannot be combined without losing precision.

A related practical point concerns facilitation. US persons are prohibited from facilitating transactions by non-US persons that would be prohibited if conducted directly by a US person. If a US-parent company facilitates a subsidiary's transaction with a blocked entity – even where the subsidiary is not itself a US person and the transaction occurs outside the United States – the US parent may be exposed. The OFAC facilitation prohibition is a further reason why a business with any US connection must conduct the OFAC analysis even for transactions that appear to be entirely conducted outside the United States.

Under the EU, the asset-freeze extends to making funds or economic resources available, directly or indirectly, to or for the benefit of a designated person. The "indirectly" and "benefit" limbs mean that the EU analysis, like the OFAC analysis, is not limited to the immediate counterparty. Both regimes ask, in their different ways, who ultimately benefits – and both require the analysis to go behind the transaction documents to the underlying economics.

This publication is general information and does not constitute legal advice. For advice on your situation, contact info@caldervance.com.