Ownership and Control Rule

Listing every company a target owns would be impossible, and targets would simply move assets into new vehicles. So many regimes treat the entity as covered when a listed party owns a set share of it or controls it. The share and the method differ by jurisdiction. The US 50 Percent Rule counts the combined direct and indirect holdings of blocked persons, so two listed owners at 30% each make a covered entity. The EU and UK also look at control, such as the right to appoint most of the board or direct how the company acts. Firms must therefore trace beneficial ownership through each layer, add up stakes held by different listed parties, and judge influence that is not a shareholding. The covered entity usually does not appear on screening lists, so a name check alone cannot find it. Most hidden sanctions exposure sits in ownership chains, not in names on a list.

A trading company passes name screening with no hits. Its register shows 35% held by one holding company and 20% by another, and both holding companies are wholly owned by the same sanctioned businessman. His indirect share adds up to 55%. The bank treats the trading company as covered, blocks its account and reports the position to its regulator.