OFAC Expands Sanctions Scrutiny Beyond 50% Ownership for Indian Firms

OFAC's latest guidance urges compliance checks beyond formal 50% ownership in sanctions cases.

The U.S. Office of Foreign Assets Control (OFAC) is signaling a major shift in sanctions compliance: ownership percentage alone no longer defines risk exposure. In March 2026, OFAC released new guidance highlighting that companies must look 'beyond legal formalities to underlying practical and economic realities' when assessing relationships with sanctioned parties.

• Traditionally, OFAC’s 50% Rule automatically blocked entities owned by designated persons at or above that threshold.
• New enforcement actions, however, show regulators penalizing firms for maintaining business ties with sanctioned individuals who retained control—even when their formal ownership fell below 50%.

For Indian companies conducting cross-border transactions, this means compliance measures must now focus on control, influence, and transaction purpose—not just ownership figures.

• OFAC’s red flags for sham transactions include ongoing involvement of blocked parties, transfers to family, complex structures, and evasive answers around sanctioned individuals’ roles.
• Enforcement examples include a $215 million penalty on GVA Capital and an $11.5 million settlement with IPI Partners, both for managing investments on behalf of Russian oligarch Suleiman Kerimov post-sanctions. Heritage Trust, which held over $1 billion for Kerimov, was also blocked despite indirect relationships.
• The Bureau of Industry and Security has mirrored this broadened approach in export control rules as of September 2025.

OFAC cautions that compliance should never become a ‘check-the-box’ procedure—especially when there is evidence of former sanctioned party involvement. Indian counsel should act now to update policies and detect hidden risks.