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2h ago

BIS’s ‘Affiliates Rule’ Extends Export Controls to Foreign Entities 50% Owned by Listed Parties

Exporters now shoulder an affirmative duty to verify foreign ownership with strict-liability exposure for errors.

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Overview

  • The interim rule took effect September 29, 2025, treating foreign companies that meet the 50 percent ownership threshold as subject to the same EAR restrictions as their Entity List or MEU List owners, including through indirect and aggregated ownership across tiers.
  • BIS added Red Flag 29 and warned that parties can be held strictly liable if they fail to determine whether counterparties are owned by listed entities, driving immediate enhancements to screening and due diligence.
  • A Temporary General License provides limited authorization for specified allied-country and certain joint-venture transactions, with published reports differing on its expiration as November 28 or December 1, 2025.
  • The rule expands the end-user scope of the Entity List and Russia/Belarus MEU foreign direct product rules and applies a most-restrictive standard when multiple restricted owners are involved.
  • BIS clarified that U.S. subsidiaries are not covered by the ownership expansion, issued updated FAQs 41–53, and opened a 30‑day public comment period through October 29, 2025.