Exam CGSS Topic 4 Question 55 Discussion

Actual exam question for ACAMS's CGSS exam
Question #: 55
Topic #: 4

In which scenarios will the Office of Foreign Assets Control's 50% Rule apply to Entity C? (Select Three.)

A. Blocked Person X owns 50% of Entity A. Entity A owns 50% (1 share) of Entity C. Blocked Person X owns 1 share directly in Entity C. B. Blocked Person X owns 50% of Entity A and 50% of Entity B. Entities A and B own 25% of Entity C each. C. Blocked Person X owns 50% (1 share) of Entity A. Entity A owns 50% (1 share) of Entity B. Entity B owns 50% (1 share) of Entity C. D. Blocked Entity A owns 50% of Entity B. Entity B owns 50% of Entity C. E. Blocked Person X owns 50% of Entity A and 25% of Entity B. Entities A and B each own 25% of Entity C. F. Blocked Entity A owns 49.99% of Entity B. Entity B owns 49.99% of Entity C.

Suggested Answer: A,C,D Vote an answer

The OFAC 50% Rule states:
* Any entity owned 50% or more - directly or indirectly - by an SDN or SDN-owned entity is itself automatically blocked.
* Ownership is cumulative through all tiers.
Apply the rule:
✔ A - Blocked Person X has direct + indirect ownership in Entity C exceeding 50% → Blocked.
✔ C - Ownership cascades: SDN → A → B → C; each at 50%. Result: Entity C is blocked.
✔ D - Blocked Entity A (>50%) → owns B (>50%) → owns C (>50%). All downstream entities are blocked.
Not blocked:
* B = 25% + 25% = 50% but SDN does not directly own A or B - the SDN owns A and B, but A and B each are not blocked themselves because ownership is not aggregated across separate entities unless they hold shares. Therefore, C is not blocked.
* E = Only 25% flows into Entity C.
* F = Neither ownership chain reaches 50%.
Reference:
OFAC 50% Rule on direct and indirect ownership.
OFAC guidance on cascading ownership and aggregation requirements.

by Ahern at Apr 06, 2026, 10:07 AM

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