How OFAC and EU Sanctions Diverge in Practice

Nearly 80,000 sanctioned persons globally as of March 2025. Annual sanctions inflation at 17.1% (LSEG Global Sanctions Index). And here's the part that keeps compliance managers awake: OFAC and EU lists overlap maybe 60% on Russia-related names. The other 40%? Different targets, different timelines, different rules.

The 50% ownership rule works differently across jurisdictions. Secondary sanctions have no EU equivalent. Enforcement philosophy, penalty structures, extraterritorial reach—all diverge in ways that create dual compliance burden for any company shipping across the Atlantic.

Key Takeaways

• OFAC's 50% rule aggregates ownership across multiple sanctioned parties; the UK still uses "more than 50%" without aggregation in most cases (Skadden, September 2024)
• The EU Council updated its Best Practices on July 3, 2024, aligning with OFAC's "50% or more" threshold—diverging from the UK's "more than 50%" standard (Council of the European Union)
• Secondary sanctions exist only under US law—EU and UK have no equivalent mechanism to penalize non-US parties for dealing with sanctioned entities
• Global sanctions inflation: 17.1% annually as of March 2025, down from 18.9% prior year. Total sanctioned persons: ~80,000 (LSEG World-Check)

Where Does the 50% Rule Actually Differ?

OFAC's 50% rule blocks any entity owned 50% or more, directly or indirectly, by one or more persons on the SDN list. Ownership is cumulative. If two SDNs each own 25%, the entity is blocked. Control without ownership doesn't trigger automatic blocking under OFAC, though the agency may still designate based on control indicators.

The EU aligned with OFAC's "50% or more" threshold in July 2024, shifting from its prior "more than 50%" standard. But the EU goes further by explicitly including control as an independent trigger. An EU-designated person can subject a company to sanctions even with minority ownership if they hold "dominant influence" or majority voting rights. The UK kept its "more than 50%" threshold after Brexit and generally does not aggregate ownership across multiple designated persons except in limited circumstances.

Here's where it gets messy in practice. A joint venture 50/50 owned by one sanctioned and one non-sanctioned party triggers OFAC blocking but might not trigger UK restrictions. Same structure, different outcomes depending on which regulatory body you're answering to.

We ran into this exact scenario with a machinery exporter last year. Their German parent company cleared UK screening. Their US subsidiary flagged the same JV partner. Twenty-two hours of legal review later, contradictory conclusions under US, EU, and UK rules. The partner wasn't on any list—but the ownership math differed by jurisdiction.

What Are Secondary Sanctions and Why Don't They Exist in Europe?

Secondary sanctions are OFAC's extraterritorial enforcement tool. They threaten non-US persons and companies with exclusion from the US financial system if they deal with designated parties. A German manufacturer paying a Russian supplier in euros through a German bank can still face OFAC secondary sanctions if that supplier is designated under relevant executive orders.

The EU has no equivalent. Neither does the UK.

And nobody's building one.

European regulators can penalize EU persons for violating EU sanctions. But they cannot reach out and punish a Chinese company for doing business with someone the EU has sanctioned. OFAC can, and does, routinely.

This asymmetry creates a practical problem for compliance planning. US-nexus analysis becomes critical for any company with dollar-denominated transactions, US correspondent banking relationships, or US-origin components in their products. The practical scope of OFAC jurisdiction is far broader than the EU's purely territorial approach.

The April 2025 OFAC designation of a Chinese "teapot" refinery for purchasing Iranian oil illustrates the reach. The refinery had no US presence, no US customers, and processed no US-origin goods. OFAC designated it anyway for purchasing over $1 billion in Iranian crude. No European regulator has equivalent authority.

How Do Enforcement Approaches Differ?

OFAC published 12 enforcement actions in 2024 with combined settlements of approximately $48.8 million (Morrison Foerster analysis, April 2025). That's a fraction of 2023's record-breaking $1.5 billion. But 2025 already looks different: the GVA Capital penalty in June 2025 hit $215.9 million alone—statutory maximum for willfully managing investments for a sanctioned Russian oligarch (OFAC Enforcement Release, June 12, 2025).

The agency operates on strict liability. Intent doesn't matter, only whether a violation occurred. Voluntary self-disclosure and cooperation reduce penalties but don't eliminate liability. The statute of limitations for IEEPA violations extended from five to ten years in April 2024, dramatically expanding historical exposure.

EU enforcement remains fragmented across 27 member states. Each national competent authority handles enforcement within its jurisdiction, creating inconsistency in speed, interpretation, and penalty severity.

The UK's OFSI operates under strict liability since the Economic Crime (Transparency and Enforcement) Act 2022, aligning with OFAC's approach. But UK enforcement volume and penalty amounts remain lower.

One pattern shows up consistently in OFAC enforcement: screening failures get called out as aggravating factors. The SkyGeek settlement from December 2024 cited failure to re-screen previously approved parties after they got designated. The Haas Automation settlement from January 2025 cited inadequate ownership due diligence—they missed that end-users were blocked entities. These aren't obscure technical failures—they're the kind of basic screening protocol breakdowns that get your file flagged.

Here's what doesn't work: treating US and EU sanctions as interchangeable. We've watched companies get burned running OFAC-only screening and assuming they're covered for EU exposure. They're not.

What Happens When OFAC and EU Designate Different Targets?

The overlap between OFAC and EU sanctions lists varies by program. For Russia-related designations, common coverage runs around 60%—which means 40% of targets appear on only one list. That gap includes hundreds of EU-only designations that won't show up in OFAC screening, and vice versa.

October 2025 showed exactly how this plays out. On October 22, OFAC designated Rosneft and Lukoil as SDNs with immediate blocking effect—Russia's two largest oil companies, plus 34 subsidiaries (Treasury.gov). The EU's 19th package came one day later, October 23, and targeted different aspects: 117 additional shadow fleet vessels (bringing total to 557), Litasco Middle East DMCC as a Lukoil enabler, Chinese refineries buying Russian crude, and new crypto restrictions (Council of the European Union).

Three authorities, overlapping but not identical targets.

A company screening only against OFAC on October 22 would miss the 117 EU-designated vessels. A company screening only against EU lists would miss the immediate Rosneft/Lukoil blocking under US law. Neither list substitutes for the other.

FAQ

Does the EU have secondary sanctions like OFAC?

No. The EU can only penalize EU persons for EU sanctions violations. No mechanism exists to threaten non-EU companies with market exclusion for dealing with EU-sanctioned parties. OFAC's secondary sanctions authority stems from US control over dollar-clearing and correspondent banking.

What is the current penalty maximum for OFAC violations?

Civil penalties reach $356,579 per violation under OFAC's 2025 inflation adjustment (31 CFR 501.701). Criminal penalties: up to $1 million per violation and 20 years imprisonment. The GVA Capital penalty of $215.9 million in June 2025 was statutory maximum for willfully managing a sanctioned oligarch's investments.

Do I need separate screening for OFAC and EU sanctions?

Yes, if you have any EU nexus—banking relationships, subsidiaries, EU-origin components, or European customers. The lists don't mirror each other. October 2025 made this concrete: Rosneft and Lukoil hit OFAC's SDN list on October 22; the EU's 19th package arrived October 23 with different targets entirely. Screening one doesn't satisfy compliance obligations for the other.

How does the UK 50% rule differ from OFAC and EU?

The UK maintains a "more than 50%" threshold rather than "50% or more," and generally does not aggregate ownership across multiple designated persons. A structure with two designated parties each holding 25% would trigger OFAC blocking and potentially EU restrictions, but might not trigger UK sanctions. This divergence appeared after the EU updated its Best Practices in July 2024.

The Structural Reality of Sanctions Divergence

The 2025 sanctions environment shows what LSEG calls "hyper-divergence"—UN consensus-based sanctions now represent just 1.22% of all global sanctions, an all-time low. The rest? Autonomous national programs with their own targets, timelines, and thresholds.

Platforms consolidating multiple sanctions lists—Lenzo, Dow Jones, Refinitiv—reduce the data aggregation burden. But the underlying legal divergence between OFAC and EU regimes requires companies to track both frameworks separately. A clean OFAC screen doesn't clear EU exposure. EU compliance doesn't satisfy OFAC. And the UK sits between with its own "more than 50%" threshold.

That structural reality isn't going away.