BIS Expands Export Controls: Adoption of the New Affiliates Rule

On 30 September 2025, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) issued an Interim Final Rule (IFR) that significantly reshapes the landscape of export compliance.

Commonly referred to as the Affiliates Rule, this measure extends Entity List and related restrictions to foreign companies that are 50 percent or more owned, directly or indirectly, by listed parties, including those identified as military end users or sanctioned persons.

This development aligns U.S. export controls with the Treasury Department’s longstanding “50 percent rule” for sanctions compliance and closes an important gap that had previously allowed affiliates to act as diversion channels.

Key Changes at a Glance

Why the Change Matters
Previously, BIS relied on a “legally distinct” standard, restricting only the named entity or its branches. The Affiliates Rule now creates additional compliance requirements. The new approach reflects BIS’s recognition that corporate structures can be deliberately opaque, and that effective controls must target ownership and influence, not just names on a list.

Implications for Business
The Affiliates Rule materially increases the due diligence burden on companies engaged in international trade. Practical implications include:

Practical Steps for Companies

To mitigate risks and ensure compliance, organizations should:

Conclusion

The Affiliates Rule represents a decisive evolution in U.S. export controls. While the rule will increase compliance complexity, it also provides clearer, more predictable standards and aligns export controls with existing sanctions practices. Companies that adapt quickly, by enhancing due diligence, integrating compliance functions, and proactively addressing ownership risks, will be best placed to manage disruption and maintain business continuity.

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Disclaimer: The information contained in this article is provided for general informational purposes only and does not constitute legal, financial, or professional advice.

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