I asked Gemini to compare and contrast “ownership and control” guidance and regulation across the world. Based on the responses I got, I ended up adding FATF, Wolfsberg, Switzerland and Japan to the bodies offering guidance:

This comprehensive analysis compares the “Ownership and Control” guidance across major national and international bodies.

Executive Summary: The “Control” vs. “Ownership” Divide

The central divergence in global sanctions regulation lies in how “Control” is treated:

• The “Mathematical” Approach (US): Ownership (50% or more) automatically triggers sanctions. Control without ownership does not automatically trigger sanctions—it is merely grounds for future designation.
• The “Status-Based” Approach (EU, UK, Canada): If a sanctioned person controls an entity (even with 1% ownership), that entity is automatically treated as sanctioned by operation of law. This shifts the burden of identifying “shadow control” onto the private sector.

---

1. Comparative Matrix: Global Ownership & Control Rules

Jurisdiction	Ownership Threshold	Aggregation Rule	Does “Control” Automatically Sanction?	Key Differentiator
USA (OFAC)	50% or more (≥ 50%)	YES	NO (See FAQ 398)	Strict mathematical application; Control is a designation criteria, not an automatic trigger.
EU (Council)	50% or more (≥ 50%)*	YES	YES	Recent 2024 update aligned EU with US. Burden is on operators to detect “dominant influence.”
UK (OFSI)	More than 50% (> 50%)	NO (Unless acting in concert)	YES	Higher threshold (>50%); Aggregation is rare; “Control” test is extremely broad.
Canada (GAC)	50% or more (≥ 50%)	Implied	YES (“Deemed Ownership”)	“Deemed ownership” legally conflates control and ownership into one trigger.
Australia (ASO)	“Owned or Controlled”	Silent(Principles-based)	YES	Less prescriptive; relies on “due diligence” to determine if assets are “indirectly” controlled.
Japan (MOF)	“Substantial Control”	Case-by-Case	YES (Permission required)	Uses a “Permission System” for payments rather than “Blocking” assets.
Switzerland	50% or more	De Facto Yes	YES (Indirect Prohibition)	Subsidiaries aren’t “blocked” per se, but paying them is “making funds indirectly available.”
UN (Security Council)	Varies by Regime	N/A	Varies	No global standard; relies on Member State implementation.

---

2. Detailed Jurisdictional Analysis

United States: The Office of Foreign Assets Control (OFAC)

The US provides the most “bright-line” guidance, prioritizing clarity over catch-all nuance.

• The “50% Rule”: If Blocked Persons own 50% or more, individually or in the aggregate, the entity is blocked.
• Aggregation: Explicitly required. If SDN A owns 25% and SDN B owns 25%, the entity is blocked.
• The “Control” Gap: OFAC explicitly states (FAQ 398) that an entity controlled by an SDN (but owned <50%) is not automatically blocked.
  • Why? OFAC prefers to name and shame. If they want a controlled entity sanctioned, they will list it.
• Applicability: Applies to all OFAC regimes unless specified otherwise (e.g., Sectoral Sanctions).

European Union: Council & Commission

The EU has moved aggressively to close loopholes, resulting in complex “control” tests.

• Ownership Update (July 2024): The EU updated its “Best Practices” to align with the US, changing its test from “more than 50%” to “50% or more.”
• The “Control” Trigger: If a Designated Person (DP) has “dominant influence” (e.g., right to appoint board majority, use of assets), the entity is sanctioned.
• Burden of Proof: Unlike the US, EU operators must assess control themselves. If you trade with a subsidiary of a Russian oligarch, and the EU later decides the oligarch “controlled” it, you are liable for a breach, even if the subsidiary was never listed.

United Kingdom: Office of Financial Sanctions Implementation (OFSI)

The UK is unique for its rejection of automatic aggregation and its slightly higher ownership threshold.

• Threshold: Strictly “more than 50%.” A 50/50 Joint Venture is not automatically sanctioned in the UK (unlike US/EU).
• Aggregation: OFSI does not aggregate ownership of different DPs unless there is evidence they are parties to a “joint arrangement” (acting in concert).
• Broad “Control” Definition: The UK test asks if it is “reasonable to expect” that the DP can achieve their desires regarding the entity’s affairs. This is a functional, outcome-based test.

Canada: Global Affairs Canada (GAC)

Canada uses a unique legal mechanism called “Deemed Ownership.”

• Concept: Property is “deemed” to be owned by a DP if the DP “controls” it directly or indirectly.
• Ambiguity: The definition includes any situation where the DP can “direct the entity’s activities.” This creates significant gray areas for compliance teams, as “influence” is often conflated with “control.”

Australia: Australian Sanctions Office (ASO)

Australia utilizes a “principles-based” approach rather than strict mathematical formulas.

• Guidance: “Control” is defined as a question of fact—whether someone has “command or direction” over an asset.
• Differentiation: Australia does not publish a “50% Rule” document comparable to OFAC. Instead, it relies on the prohibition against “making assets available to” a DP. If a DP owns a company, paying that company is effectively paying the DP.

Japan: Ministry of Finance (MOF) & METI

Japan operates a “Permission System” under the Foreign Exchange and Foreign Trade Act (FEFTA).

• Mechanism: Rather than “blocking” an entity, Japan prohibits payments to DPs without “permission” (which is never granted).
• Substantial Control: Restrictions apply if a DP holds a majority of shares OR exercises “substantial control” (e.g., dispatching executives).
• End-User Lists: Japan places heavy reliance on METI’s “End User List.” If a subsidiary is not on the list, Japanese firms often presume trade is permitted unless “control” is glaringly obvious.

Switzerland: SECO

Switzerland aligns autonomously with the EU but maintains legal distinctiveness.

• “Making Available”: Swiss law does not always “block” the subsidiary of a DP. Instead, it prohibits “making funds available” to the DP.
• Interpretation: Paying a subsidiary is viewed as “indirectly” making funds available to the parent.
• Differentiation: In the Popov case, Swiss courts demanded high evidence of control. However, 2024 guidance has aligned Switzerland closer to the EU’s broad “control” presumption to prevent circumvention.

United Nations (UNSC)

• No Global Standard: The UN designates individuals/entities but leaves “ownership/control” interpretation to Member States.
• Regime Specific: Some resolutions (e.g., DPRK) include specific language on “entities owned or controlled by” designated persons, but the implementation of what “controlled” means (e.g., 50% vs 25%) is decided by national authorities (OFAC, OFSI, etc.).

---

3. International Standard Setters

FATF (Financial Action Task Force)

• Focus: Anti-Money Laundering (AML) & Beneficial Ownership (BO).
• The “25% Gap”: FATF recommends a 25% threshold for identifying beneficial owners for AML screening.
• Conflict: This creates a disconnect. Compliance teams screen at 25% (for FATF/AML) but block at 50% (for Sanctions). FATF guidance on “Proliferation Financing” urges countries to look beyond legal ownership to “ultimate effective control” to prevent evasion.

The Wolfsberg Group

• Guidance: Represents global banking best practices.
• Recommendation: Wolfsberg explicitly notes that the “50% Rule” is a legal baseline, not a risk management ceiling.
• Control Risk: They advise that relying solely on lists is insufficient in “Control-based” jurisdictions (UK/EU). They recommend screening for Beneficial Owners (at 10-25%) to identify “aggregation” risks that might sum up to >50%.

Summary of Practical Implications

1. The “Joint Venture” Trap: A 50-50 JV with a sanctioned party is Blocked in the US/EU, but Allowed in the UK (statutorily, though high risk).
2. The “Minority Owner” Risk: A company 25% owned by a sanctioned oligarch who appoints the CEO is Safe in the US (unless listed), but Radioactive in the EU/UK (due to “Control”).
3. The “Aggregation” Headache: Three sanctioned individuals each owning 20% of a company results in a Block in the US/EU (60% total), but No Block in the UK (unless they are proven to be working together).

Source List for “Ownership and Control” Analysis

The following is a curated list of the primary government and regulatory source documents used in the comparative analysis.

1. United States (OFAC)

• Document: OFAC Frequently Asked Questions (FAQs) – Questions 398, 401, and 50% Rule
• Description: The primary interpretive guidance for the “50 Percent Rule” and the distinction between ownership and control.
• URL: OFAC FAQ Topic: Entities Owned by Blocked Persons (50% Rule)

2. European Union (Council of the EU)

• Document: Update of the EU Best Practices for the Effective Implementation of Restrictive Measures (July 3, 2024)
• Description: The critical update that aligned the EU ownership threshold (“50% or more”) with the US and clarified the “Dominant Influence” control tests.
• URL: EU Best Practices (Council Document ST 11377 2024 INIT)
• Additional Source: Commission Consolidated FAQs on the Implementation of Council Regulation No 833/2014
• URL: European Commission Sanctions FAQs

3. United Kingdom (OFSI)

• Document: OFSI General Guidance – UK Financial Sanctions
• Description: See specifically Chapter 4 (Ownership and Control), which details the “reasonable to expect” test and the rejection of automatic aggregation.
• URL: OFSI General Guidance (GOV.UK)

4. Canada (Global Affairs Canada)

• Document: Special Economic Measures Act (SEMA) – Amendments regarding Deemed Ownership
• Description: The legislative text (Section 2.1) establishing that property controlled by a designated person is “deemed” to be owned by them.
• URL: Consolidated SEMA Legislation (Justice Laws Website)
• Guidance Page: Canadian Sanctions: Essential Information
• URL: GAC Sanctions Guidance

5. Australia (Australian Sanctions Office)

• Document: ASO Guidance Note: Dealing with Assets Owned or Controlled by Designated Persons
• Description: A thematic guidance note explaining the “control” test as a question of fact rather than a mathematical formula.
• URL: DFAT/ASO Sanctions Guidance Notes

6. Japan (MOF & METI)

• Document: Foreign Exchange and Foreign Trade Act (FEFTA) – Q&A and End User List
• Description: Technical guidance on the “permission” system for capital transactions and the list of entities requiring license verification.
• URL: METI Security Export Control Policy & Q&A
• URL: Ministry of Finance Economic Sanctions List (Japanese/English)

7. Switzerland (SECO)

• Document: Ordinance on Measures Connected with the Situation in Ukraine (FAQs)
• Description: The primary source for the “making funds available” interpretation and the alignment with EU “control” standards.
• URL: SECO Sanctions Measures & FAQs

8. The Wolfsberg Group

• Document: Wolfsberg Guidance on Sanctions Screening (2019)
• Description: Industry best practices recommending beneficial ownership screening (10-25%) to mitigate “Control” risks.
• URL: Wolfsberg Group Guidance on Sanctions Screening

9. Financial Action Task Force (FATF)

• Document: Guidance on Beneficial Ownership of Legal Persons
• Description: The global standard setting the 25% threshold for beneficial ownership, which conflicts with the 50% sanctions standard.
• URL: FATF Guidance on Beneficial Ownership