The 50 Percent Rule OFAC. Identify Entities Owned by Blocked Persons

In this video I will cover what is the 50 Percent Rule OFAC has established to identify blocked entities. We will go through 5 examples, and see how direct and indirect SDN connections contribute to the decision to block Entities Owned by Blocked Persons; particularly for complex company structures.
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▬▬ CHAPTERS ▬▬
0:00 - 50 Percent Rule OFAC Intro
1:02 - What does the OFAC’s 50 Percent Rule say?
2:07 - 50 Percent Rule OFAC example 1
2:43 - 50 Percent Rule OFAC example 2
3:57 - 50 Percent Rule OFAC example 3
5:03 - 50 Percent Rule OFAC example 4
6:10 - 50 Percent Rule OFAC example 5
✅ References:
U.S. DEPARTMENT OF THE TREASURY / ENTITIES OWNED BY BLOCKED PERSONS (50% RULE) / FAQ: home.treasury.gov/policy-issu...
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DISCLAIMER:
This video is intended for general informational or entertainment purposes only. The information in this video is not intended to replace legal advice. The views and opinions expressed in this video are those of the speaker/s and do not necessarily reflect the original policy or position of people, institutions, or organizations that the speaker/s may or may not be associated with in professional or personal capacity, unless explicitly stated. Furthermore, no endorsement of any criminal activity is expressed or implied.
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© Marco Beranzoni - All rights reserved.
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[@saleem2347]

Hi there, I’d like to thank you, today I passed and became Certified Global Sanctions Specialist… I watched your this video and it helped me a lot. There were around five questions on same 50 percent rule in my exam and I marked them right. Keep up the good work and thanks again.

[@FinCrimeAgent]

Hi Saleem, that’s a fantastic news. Well done! Thanks also for sharing your feedback, I’m very happy that my video helped you with the preparation for your certification 👍🏻 there will be many more sanctions related video on my channel. I hope you’ll find them interesting and useful during your career. Thanks for watching! Marco

[@tsv2031]

Hi Saleem - glad to know that you are Certified and congratulations.. it would be great if you share some tips as I’m aspiring to do CGSS 😊

[@casmartin790]

Just a comment to say congratulations to you, you clearly deserve it! I wish you all the best in you career and aspirations 👍🏾💛🤝🏾

[@watergateHQ]

congratulations!

[@FinCrimeAgent]

@watergateHQ thank you for commenting 👍🏻

[@Sarumanthewhite888]

Very useful video, thank you Sir for making the OFAC 50% easier for us to understand, the diagrams are really well made!~

[@FinCrimeAgent]

Thanks Paul for your positive feedback. I’m pleased my video is useful to you 👍🏻🙂

[@biswajitjena9908]

Perfect content without shit... Soon you will reach 1 million

[@FinCrimeAgent]

Thank you for your comment 👍🏻

[@casmartin790]

Hi there Marco! Firstly, thank you for taking the time out to share your wealth of knowledge and experience with us all, you are seriously a tremendous help! I have a question about the ownership and structures as I'm a little confused. In example 1, if Blocked Person X owns 50% of company A, and company A owns 50% of company B, I don't quite understand why Blocked Person X doesn't own 25% of company B, but also owns 50% of company B? And with example 3, if BP X owns 50% of entity A and 10% of Entity B, and A owns 40% of entity B, I'm confused as to why BP owns 40% and not 30%? I have no actual experience in AML but I'm trying to get into the industry so do watch your content. Thank you for all that you do 👍🏾

[@FinCrimeAgent]

Hi Cas, thank you so much for your kind words and for watching my videos! I'm glad you find them helpful. Regarding your questions, let me try to clarify the examples for you: In Example 1, Blocked Person X owns 50% of Entity A, and Entity A owns 50% of Entity B. Since Blocked Person X has 50% ownership of Entity A, it indirectly owns 50% of Entity A's stake in Entity B. So, Blocked Person X indirectly owns 50% of Entity B through Entity A. This is why we consider Blocked Person X to own 50% of Entity B, and not 25%. In Example 3, Blocked Person X owns 50% of Entity A and 10% of Entity B directly. Entity A owns 40% of Entity B. Since Blocked Person X has a 50% stake in Entity A, it indirectly owns 50% of Entity A's 40% stake in Entity B, which is 20%. When you add Blocked Person X's direct 10% ownership of Entity B to the 20% indirect ownership through Entity A, you get a total ownership of 30%. I apologize if there was any confusion in the script, and I hope this clears things up. Please let me know if you have any more questions or need further clarification. My very best wishes as you continue to learn about AML and pursue a career in the industry! Marco

[@user-qh4dp7cu8q]

Hi Marco, very interesting video. Congrats and well done for the good work! I've got a question for which i cant find any answer online.... Blocked Company A is the Nominee Shareholder of Company B which is indirectly owned (the UBO details are Officially registered) with 100% of the shares from an unblocked person who is also the only Bank signatory and uses Company A just as a service provider (Nominee). Is Company B considered blocked? Tough one hahaha!

[@FinCrimeAgent]

Hi John, thank you for your kind words and your insightful question! Apologies for the late reply... I missed your comment somehow. The situation you've described is indeed a complex one, often seen in AML and compliance fields. While I can't give a definitive answer without considering all the specifics, generally, a company (in this case, Company B) isn't necessarily blocked just because its nominee shareholder (Company A) is. The key determining factor is typically the control or beneficial ownership, rather than nominal ownership. In this scenario, if the unblocked person holds ultimate beneficial ownership and control of Company B, it might not be considered blocked. However, it's important to note that every jurisdiction has its own set of laws and regulations, and interpretations can vary. Therefore, I highly recommend consulting with a legal expert or compliance officer in your jurisdiction for a definitive answer. Moreover, it's vital to ensure robust due diligence is in place to clearly understand the relationships and control dynamics among entities, especially when dealing with complex structures involving blocked entities. I hope this provides some clarity, and I appreciate your thought-provoking question! It certainly highlights the intricate nature of AML compliance. Best, Marco