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
Automatic coverage of affiliates: Any entity 50% or more owned by a listed entity is now subject to the same restrictions as its parent—even if it is not explicitly named on the Entity List.
Broader scope of restrictions: The Affiliates Rule applies not only to the Entity List but also to the Military End-User (MEU) List and certain Specially Designated Nationals (SDNs) identified in §744.8.
“Most restrictive” standard: Where multiple listed entities jointly own an affiliate, the strictest set of license requirements will apply.
New compliance obligations: Exporters, re-exporters, and transferors face an affirmative duty to determine ownership of counterparties. If ownership cannot be established, they must resolve the issue, seek a license, or decline the transaction.
Temporary General License (TGL): A limited TGL has been introduced to ease transition, but only for specific circumstances and for a short duration.
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:
Expanded screening requirements
Companies must go beyond name-based screening and map ownership structures. This may be particularly challenging in jurisdictions where shareholder data is incomplete or unavailable.
Red flag obligations
Where ownership information cannot be determined, BIS has introduced a new “Red Flag” (No. 29). Exporters cannot proceed without resolving ownership uncertainty or obtaining a license.
Consistency with OFAC compliance
Many businesses already screen for OFAC’s 50 percent rule. Leveraging those frameworks will help, but BIS compliance carries its own strict liability standard, meaning mistakes can still result in enforcement.
Potential disruption to supply chains and partnerships
Joint ventures, distributors, or suppliers that appear unproblematic at first glance may now fall under restrictions if they are partly owned by listed parties.
Recordkeeping and licensing
Any transaction involving affiliates covered by the rule must be treated as if the counterparty itself were listed. Companies should expect an increase in licensing needs and longer processing times.
Practical Steps for Companies
To mitigate risks and ensure compliance, organizations should:
Review counterparties immediately: Identify whether affiliates of listed parties are present in your supply chain or client base.
Enhance screening tools: Adopt ownership-screening solutions that can identify 50 percent or greater aggregate ownership by listed parties.
Implement red flag protocols: Train teams to escalate unresolved ownership questions and seek legal or licensing advice.
Strengthen recordkeeping: Maintain detailed files demonstrating due diligence, particularly when ownership is complex or obscured.
Coordinate sanctions and export control compliance: Align BIS-focused programs with existing OFAC frameworks to ensure a consistent enterprise-wide approach.
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.