A listed holding of thirty-one percent. A second listed person with twenty-two percent. Neither crosses any obvious threshold – yet the target company may be fully blocked under UK financial sanctions. For a compliance team screening a potential joint-venture partner or trade-finance counterparty, the question is not abstract. The ownership and control assessments that determine whether a non-listed entity is caught by a designation can decide whether the deal closes, whether the funds clear, or whether a voluntary self-disclosure becomes necessary.
Under OFSI (the Office of Financial Sanctions Implementation, which administers UK financial sanctions), a non-listed entity is caught when a designated person owns or controls it – but the test is broader than a simple numerical threshold. Ownership turns on shareholding and voting rights; control extends to any arrangement giving a designated person the ability to direct activities or appoint the majority of the board. As of July 2026, OFSI's published guidance confirms this dual test, and it departs meaningfully from the purely mechanical fifty-percent rule applied by OFAC.
This analysis sets out how the OFSI test operates, where it aligns with and diverges from the OFAC, EU, and Australian positions, the risk flags that practitioners encounter most often, and when the facts require external counsel rather than in-house screening.
What is the legal basis for OFSI's ownership and control test?
OFSI's authority to enforce financial sanctions derives from the Sanctions and Anti-Money Laundering Act (SAMLA), which provides the primary legislative architecture for UK autonomous sanctions. The specific ownership and control criteria appear in the thematic regulations made under SAMLA – each regime has its own instrument, but the formulation of the ownership and control test is materially consistent across them. OFSI's published guidance on ownership and control supplements the regulations and provides interpretive detail on how the test applies in practice.
The dual structure is the key point. First, there is an ownership limb: broadly, a designated person owns an entity when that person holds a sufficient proportion of shares or voting rights. Second, there is a control limb: a designated person controls an entity when they can direct or influence its activities through any arrangement – contractual, structural, or behavioural. The guidance makes clear that these are alternative routes to capture, not cumulative ones. An entity that passes the ownership limb can still be caught by the control limb, and vice versa.
The practical implication is that a compliance team cannot stop at a share register. Board-composition rights, veto rights in a shareholders' agreement, management agreements, and economic dependency can all constitute control. We regularly advise clients that have cleared a counterparty on ownership grounds and then found a control issue buried in a side agreement. That second look is not optional – it is part of every competent assessment.
The position above covers the standard case. Your facts – the counterparty's ownership chain, the contractual arrangements in play, and the regime active on your transaction – change the analysis materially.
For a structured review of your exposure under UK financial sanctions, contact Calder & Vance at info@caldervance.com.
How does the OFSI test compare with the OFAC 50 percent rule?
The OFAC test – 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. If the aggregate ownership by blocked persons reaches or exceeds 50 percent, the entity is treated as blocked, regardless of whether any blocked person can actually direct the business. The figure is the trigger; management independence and operational separation are irrelevant.
OFSI's test is both wider and more contextual. It is wider because the control limb does not require any particular ownership percentage – a designated person holding twenty percent but possessing contractual veto rights over material decisions could well satisfy the control test. It is more contextual because the answer depends on the specific rights and arrangements in place, not solely on a number that a screening system can read off a shareholder register.
There is also an aggregation question that differs across the regimes. Under OFAC, the holdings of multiple blocked persons are aggregated to reach the fifty-percent threshold. OFSI's guidance addresses aggregation in ownership terms, but the control analysis is inherently an assessment of each designated person's actual influence – aggregation of control rights is a more fact-sensitive exercise. For a business with counterparties touching both US and UK sanctions, this means that a cleared result under one regime does not clear the same counterparty under the other. Both tests must be run independently.
In our practice, the most common error is precisely this: a compliance team applies the OFAC mechanical test globally and assumes it satisfies the OFSI analysis. It does not. A counterparty with a designated person holding forty-eight percent may be clear under OFAC but caught under OFSI if that person also holds board-appointment rights.
Where does the EU position sit relative to OFSI?
The EU ownership and control test, set out in the relevant Council regulations, is structurally similar to the OFSI model – it too has both an ownership limb and a control limb, and neither requires a strict fifty-percent threshold in all cases. The EU General Court has considered ownership and control questions in the context of asset-freeze designations, and the case law confirms that the control analysis is substantive rather than formal.
There are, however, practical differences. EU sanctions apply to EU persons and activities within the EU; OFSI applies to UK persons and activities within the UK. Post-Brexit, a business operating in both jurisdictions must satisfy both regimes independently. The instruments are not identical, the guidance is not identical, and the enforcement postures – OFSI on the UK side and the relevant member-state competent authorities on the EU side – are distinct. An assessment valid under an EU Council regulation does not bind OFSI, and vice versa.
The EU also has its own guidance on the ownership and control concept, and there have been cases where the EU and UK positions on a specific entity's status have diverged in practice, partly because the autonomous sanctions lists themselves are not always identical post-Brexit. Claire Dubois, our EU sanctions adviser, works alongside our UK team on matters where the same transaction touches both regimes – the analysis is genuinely different, not merely a translation exercise.
A further divergence concerns the EU Blocking Regulation. Where US secondary-sanctions risk intersects with an EU-nexus transaction, the Blocking Regulation can impose obligations on EU operators that cut across a straightforward OFAC-first analysis. That interaction sits beyond a pure OFSI-EU comparison, but it illustrates why a multi-regime transaction needs a coordinated assessment rather than three separate regime analyses conducted in silos.
How does Australia's ownership and control test compare?
Australia's autonomous sanctions regime, administered by DFAT under the relevant national instruments, has developed an ownership and control approach that shares the dual-limb logic of the OFSI and EU tests – but with its own interpretive nuances. Like OFSI, the Australian test is not confined to a fixed numerical threshold; control-based capture is possible even where a designated person's ownership stake is sub-majority.
The practical difference for cross-border businesses is one of regulatory density. OFSI has published substantial interpretive guidance on ownership and control. The Australian framework, while legally sound, has a smaller body of published administrative guidance, which means that practitioners often need to work more closely from the text of the relevant instrument and from DFAT's case-specific communications. In our experience, businesses operating in the Asia-Pacific region alongside UK operations cannot assume that their OFSI-compliant assessment methodology transfers unchanged to Australia.
For clients with both UK and Australian exposure, we recommend a side-by-side assessment rather than a sequential one. The factual inputs – ownership data, shareholder agreements, board rights – are largely the same; the analytical criteria are not. Our analysis of how the OFSI and Australian tests compare in detail addresses the structural divergences and the documentation standards each regime expects. For businesses considering whether their compliance programme meets the Australian standard, our compliance audit and testing service for Australia offers a structured review.
What about Singapore and other Asia-Pacific regimes?
Singapore's sanctions regime, administered principally by MAS (the Monetary Authority of Singapore) for financial-sector participants and by MTI for broader trade controls, applies the UN Consolidated List as its baseline and supplements it with autonomous autonomous designations. The ownership and control concept exists in the Singapore regime, but the test and its interpretive guidance differ from the OFSI model in ways that matter for a business with significant Singapore operations.
Specifically, the Singapore approach places significant weight on the UN Consolidated List as the primary designation reference. For transactions that touch Singapore, the analysis begins with UN-list compliance, then addresses any Singapore-specific autonomous designations, and then considers whether the ownership and control criteria of the relevant instrument capture any non-listed counterparty. The sequencing and the threshold logic are not identical to OFSI's.
Japan and the UAE present further variation. Japan's foreign exchange and trade control regime operates through a different administrative architecture; the UAE's sanctions framework has developed considerably in recent years and includes its own Executive Office guidance on ownership and control questions. Our analysis of the Singapore ownership and control position covers the MAS/MTI framework in detail.
The common thread across these regimes is that the same underlying factual question – does a designated person own or control this entity? – is answered by different legal criteria in different jurisdictions. A global business cannot maintain a single assessment methodology and apply it uniformly. The methodology must be calibrated to each regime that is in play on a given transaction.
What are the main risk flags in OFSI ownership and control assessments?
Risk flags in OFSI ownership and control assessments tend to cluster around five areas: incomplete ownership data, overlooked contractual rights, stale assessments, aggregation errors, and reliance on screening tools as a substitute for legal analysis.
Incomplete ownership data is the most frequent source of error. Beneficial ownership registries are not always current; offshore structures can obscure a designated person several layers from the surface. An assessment that reads only the first layer of a corporate structure – the direct shareholders – will miss an indirect holding by a designated person that is both legally significant and regulatorily apparent on deeper investigation.
Overlooked contractual rights are the second major category. Shareholders' agreements, call options, management agreements, and nominee arrangements can all create the kind of influence over an entity's activities that satisfies the control limb of the OFSI test. These documents are not visible on a public register. An assessment that does not include a contractual review of the relevant agreements is incomplete.
Stale assessments present a timing risk that is often underestimated. A counterparty that was clean at the time of onboarding can become a concern if a shareholder is subsequently designated, if the ownership structure changes, or if OFSI updates its list. Compliance programmes that treat the initial assessment as permanent – rather than as a point-in-time snapshot requiring periodic refresh – carry a material risk of transacting unknowingly with a captured entity.
Aggregation errors arise where a compliance team treats each ownership or control relationship individually rather than looking at the combined effect of multiple designated persons' stakes or rights. OFSI's guidance addresses aggregation, and missing it can lead to a false-negative result.
Over-reliance on automated screening is the fifth risk. Screening tools are essential for list-matching; they are not adequate substitutes for a legal analysis of the ownership and control question. A tool that flags a name on the SDN List (OFAC's list of Specially Designated Nationals and blocked persons) or OFSI's consolidated list does not automatically assess whether, through ownership or control, a non-listed entity is also caught. That step requires human legal analysis.
If a transaction has already been flagged – or if a screening hit has surfaced that you cannot resolve through internal analysis – an early legal review can preserve options that narrow with time. Contact Calder & Vance at info@caldervance.com for a confidential initial assessment.
A common misconception: the OFSI test is just a softer OFAC rule
A myth we encounter regularly is that the OFSI ownership and control test is simply a more lenient version of the OFAC fifty-percent rule – that because OFSI does not use a fixed numerical threshold, it is easier to clear under OFSI than under OFAC. This misunderstands the structure of the test entirely.
The OFSI test is not more lenient. In many cases it is stricter, because the control limb can capture an entity regardless of ownership percentage. A counterparty that is unambiguously clear under OFAC – because no blocked person holds fifty percent or more – can still be caught by OFSI if a designated person holds contractual rights that give them decisive influence over the entity's activities. The absence of a fixed threshold does not narrow the scope of the test; it broadens it.
The practical lesson is that a pass under one regime is not a pass under another. Compliance programmes that calibrate their methodology to the OFAC mechanical test and apply it across all regimes will systematically underestimate their UK and EU exposure. In our cross-border practice, we see this pattern frequently in businesses that have strong OFAC compliance infrastructure but have not updated their methodology to address the OFSI control question explicitly.
The correction is procedural: the assessment methodology must include a specific step for the OFSI control analysis, distinct from the OFAC ownership calculation, and that step must involve a review of contractual arrangements rather than solely a check of the share register.
When should a business involve external sanctions counsel on ownership and control?
External counsel is appropriate when the ownership or control question is genuinely uncertain – when the facts do not produce a clear result on the face of the available data. Several practical triggers indicate that the internal assessment has reached its limits.
The first trigger is structural complexity: a counterparty with multiple layers of ownership, cross-holdings, trust structures, or nominee arrangements that cannot be fully mapped without specialist analytical work. The second is contractual ambiguity: shareholder agreements or management arrangements that may or may not satisfy the control limb, where the legal characterisation of the arrangement is not obvious. The third is multi-regime exposure: a transaction that touches OFSI, the EU, OFAC, and one or more Asia-Pacific regimes simultaneously, where a single-regime assessment leaves gaps.
The fourth trigger – and the most time-sensitive – is a suspected breach. Where a business has transacted with an entity and subsequently identifies that a designated person may have owned or controlled that entity at the time of the transaction, the clock on any reporting obligation begins to run from the point of knowledge. Under OFSI, there is a reporting obligation for persons who know or have reasonable cause to suspect that they hold funds or economic resources belonging to a designated person or entity. Missing a reporting window has its own regulatory consequences, distinct from the underlying transaction.
In a recent matter, a financial institution processing trade-finance transactions identified, during a periodic review of its counterparty files, that a borrower's shareholder had been designated under UK sanctions after the facility was drawn. The institution needed to assess whether the ownership and control test was satisfied at the time of drawdown, whether a reporting obligation had arisen, and what the options were for the continuing facility. We assessed the ownership chain, advised on the reporting position, and assisted with a structured engagement with OFSI. The matter illustrated precisely why the control analysis cannot wait until the next scheduled review cycle.
A decision matrix may help to orient the analysis:
Situation A – the ownership chain is clear and no designated person holds a material interest: standard screening suffices; document the result and the methodology used.
Situation B – a designated person holds a sub-majority stake and there are contractual rights to be reviewed: legal analysis of the control limb is required before transacting; timeline depends on the complexity of the agreements, typically measured in days rather than weeks.
Situation C – a suspected breach has been identified: legal advice on the reporting position is required promptly; voluntary self-disclosure may be relevant depending on the facts.
Related practices
- Compliance audit and testing – Australia – structured review of whether your programme meets the Australian sanctions standard
- OFSI vs Australia: ownership and control compared – detailed analysis of the structural divergences between the two regimes
- Singapore ownership and control assessments – the MAS/MTI framework and its interaction with the UN Consolidated List
Frequently asked questions: ownership and control assessments under OFSI
Where do the regimes diverge on ownership and control assessments?
The principal divergence is between the OFAC mechanical fifty-percent ownership rule and the OFSI/EU dual-limb test that includes a substantive control analysis. OFAC's test turns on a numerical threshold; OFSI's test can capture an entity through contractual or structural control even where no designated person holds a majority stake. Australia and Singapore operate their own variants, each with distinct threshold logic and guidance depth. A pass under one regime does not constitute a pass under another.
Which regime is stricter on ownership and control assessments?
There is no single answer. OFAC's test is strict in the sense that it is mechanical and applies without any control-based softening: fifty percent is the line. OFSI's test can reach further because the control limb has no fixed numerical floor. A counterparty may clear OFAC but be caught by OFSI through a control arrangement. For cross-border businesses, the prudent approach is to apply the most demanding applicable test – where regimes diverge, the stricter prohibition governs the exposure of the business operating under that regime.
What should a cross-border business do about ownership and control assessments?
A cross-border business should maintain a regime-specific assessment methodology for each jurisdiction in which it operates or to which its transactions are connected. The methodology must include both the ownership calculation and a contractual review for the OFSI and EU control limbs. Assessments should be refreshed when a counterparty's ownership structure changes, when a new designation is made that could affect existing relationships, and at periodic intervals as part of the sanctions risk and compliance programme. Where the analysis produces an uncertain result, external counsel should be involved before the transaction proceeds.
About the author
Henry Ashworth advises on UK financial sanctions and export controls, including OFSI licensing and enforcement, and judicial-review challenges to designations. He acts for multinationals, financial institutions, and individuals navigating the UK sanctions regime, with a focus on ownership and control assessments, voluntary self-disclosure, and OFSI engagement. Calder & Vance – International Sanctions & Export Control Counsel.
About Calder & Vance
Calder & Vance is an independent international sanctions and export-control boutique. We advise multinationals, financial institutions, exporters, and individuals on the major regimes – OFAC and BIS in the United States, OFSI and ECJU in the United Kingdom, the EU Council regulations and the EU General Court, the United Nations Consolidated List, and the regimes of Switzerland, Canada, Australia, the UAE, Singapore, and Japan. Our work is limited to lawful compliance, licensing, delisting, enforcement defence, and due diligence. To discuss a matter, contact info@caldervance.com.
Disclaimer: This material is general information, not legal advice, and is not a substitute for advice on your specific facts. Sanctions and export-control rules change frequently and differ by regime; verify the current position before relying on anything stated here. Calder & Vance does not advise on circumventing or evading sanctions. For advice on your situation, contact info@caldervance.com.