The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) on Tuesday issued a sweeping final rule targeting sanctions evasion through sham transactions, layered ownership structures, and the use of third-country shell companies.
The rule, which takes effect June 1, 2026, codifies the '50% rule' but expands it to include indirect ownership through multiple tiers of entities. It also creates a rebuttable presumption that any transaction involving a designated entity within the previous five years is subject to sanctions, shifting the burden of proof to the financial institution.
Treasury Secretary Janet Yellen said the rule closes 'egregious loopholes' exploited by Russian oligarchs and Iranian front companies. 'If you structure a deal to hide a sanctioned party, you are now on notice that we will find it and we will act,' Yellen said.
Industry reaction and compliance costs
Banking and compliance groups expressed concern about the expanded liability. 'The presumption provision is a significant departure from longstanding practice,' said Rob Nichols of the American Bankers Association. 'We worry it will lead to mass de-risking, cutting off legitimate clients.'
OFAC estimates the rule will increase compliance costs by approximately $240 million annually across the financial sector but said the national security benefits outweigh the costs. The rule also adds 25 new general licenses for humanitarian and energy transactions.
If you structure a deal to hide a sanctioned party, you are now on notice that we will find it and we will act. The era of easy evasion is over.
The rule was first proposed in August 2025 and received 1,200 public comments, the most of any OFAC rulemaking in a decade.
