Many sanctions regimes, including those of the US, EU, and UK, enforce prohibitions on transactions with entities that are majority-owned by sanctioned persons—even when the entities themselves are not explicitly listed on government sanctions lists. These rules demand careful scrutiny of ownership structures to avoid indirect dealings with sanctioned parties.
The US Treasury’s Office of Foreign Assets Control (OFAC) has codified this principle through the 50% Rule, which extends sanctions restrictions to entities owned 50% or more by one or more designated individuals or entities, either individually or in aggregate. However, sanctions compliance risks are evolving globally, and a recent decision in Australia has broadened the scope of what companies must consider.
In a landmark ruling, the Australian Federal Court determined that a company would have violated Australian sanctions by fulfilling contracts with an entity in which two sanctioned persons held minority ownership interests. This ruling challenges the traditional understanding of ownership thresholds, introducing new compliance risks for companies operating in or trading with Australia.
Experts from Kharon, Norton Rose Fulbright, and National Australia Bank (NAB) discuss the OFAC 50% rule, the Australian “minority ownership” case, and the implications for private sector due diligence.
Speakers:
Charles Nugent-Young, Senior Advisor, Risk Advisory, Norton Rose Fulbright Australia
Charles is a lawyer with extensive government experience, having previously worked in the Commonwealth Attorney-General's Department and Department of Home Affairs. He has specific expertise in laws relating to anti-money laundering and counter-terrorism financing (AML/CTF), and the operations of Australia's AML/CTF regulator and financial intelligence unit AUSTRAC. He also has unique insights into the Financial Action Task Force (FATF) and the application of the FATF Standards, having served as the Legal Expert Assessor on the FATF Mutual Evaluation Report of Japan.
Charles also advises clients on sanctions-related issues and engagements with the Australian Sanctions Office and other authorities with responsibilities in the Australian Sanctions Regime. He also recently completed a long-term secondment as a Senior Lawyer in the Regulatory Legal team of ANZ Banking Group.
Dr. Adam Ruff, General Manager, Sanctions Risk Management, NAB
Dr. Adam Ruff is General Manager, Sanctions Risk Management, at National Australia Bank. He has over 20 years experience in financial crime and compliance roles, and previously worked at Deloitte and ANZ bank. He completed a doctorate with a thesis in AML law and its impact on personal liberties, including privacy.
Dane Shelly, Head of Asia, Kharon
Dane leads Kharon's growth strategy in Asia, where he manages sales, partnership and capacity building engagements throughout the region. His career spans nearly two decades working in the areas of sanctions, export controls, and economic security in both the public and private sectors. Dane has worked in Asia since 2015 as a U.S. diplomat in India and in senior compliance roles with Citibank, PayPal, and Standard Chartered in Singapore. Earlier in his career, Dane researched terrorism financing for the U.S. Defense Department and sanctions evasion for the U.S. Treasury Department Office of Foreign Assets Control (OFAC).