BIS Affiliates Rule: Prepare now for ownership-based restricted party screening

The BIS Affiliates Rule – also known as the “BIS 50% Rule” or “Entity List 50% Rule” – is a US export control rule in the Export Administration Regulations (EAR). The EAR have extraterritorial application and apply worldwide to trade in US products. The inclusion of the Affiliates Rule in the EAR extends the scope of the Entity List to include indirect sanctions.

This means that trading US products is restricted not only for companies directly listed on the Entity List, but also for unlisted companies that are more than 50% owned (directly, indirectly, or in aggregate) by listed entities.

All companies worldwide that have US products in their product portfolio are subject to the EAR. They therefore not only need to screen their business partners in the future but also identify and screen the owners of their business partners.

Further details and the official text can be found in the Federal Register notice on the BIS Affiliates Rule.

The BIS Affiliates Rule was published as an interim final rule on September 30, 2025, with an effective date of September 29, 2025. BIS later issued a one-year suspension effective November 10, 2025, pausing the rule until November 9, 2026. Unless the suspension will be extended, the rule’s requirements are scheduled to return on November 10, 2026. The good news is that the current pause gives companies time to prepare and get ready.

There is currently a strong focus in the US (among other nations) on minimizing sanctions evasions involving Russia and China. The sanctions under the Entity List and the Military End User List (MEUL) – which until now have applied only directly – have been identified as a channel for circumvention. US products could be procured and resold by unlisted subsidiaries without an impact of sanctions.

The BIS cites the following reasons for adopting the Affiliates Rule:

• To reduce the risk of sanctions circumvention
• To increase transparency requirements for exporters
• To strengthen the enforcement of national security regulations
• To align with OFAC standards for verifying ownership structures

The BIS Affiliates Rule applies to companies worldwide that deal in US items (commodities, software, and technology). It also covers activities by US persons subject to the EAR.

The scope of the US EAR is defined in Part 734

• Items subject to the EAR are defined in §734.3, 4 and 9 of the EAR.
• Activities subject to the EAR are defined in §734.5 of the EAR.

This applies to companies worldwide that:

• trade in US-origin products
• trade in products manufactured outside the United States that contain controlled US items in excess of a certain percentage which is to be determined in line with the de minimis rule as per §734.4
• trade in products manufactured outside the United States that fall within the scope of the EAR as “Foreign-Direct Products” (FDP) under the provisions of §734.9 EAR

In addition, individuals participating in activities falling within the scope of the EAR are also affected.

Important Note: The Entity List applies to all US products, including mass-produced items classified under EAR99.

In the following articles, you can learn more about when US export control requirements under the EAR apply:

• EAR99, CCL, ECCN, and more: tips and checks for US export controls
• What to consider when exporting and re-exporting US items 

The EAR apply worldwide to trade in US products. Consequently, companies in all industries are affected. The US places particular emphasis – also regarding the FDP rules – on the following areas:

• Semiconductors, chips, and wafers
• Quantum computing
• Aviation, aerospace, and defense
• High-tech and electronics
• Pharmaceuticals
• Biotechnology and medical technology
• Automotive
• Chemicals
• Oil and gas
• Logistics and freight forwarding
• Telecommunications
• Research institutions

But to emphasize again: The rule applies to all companies working with US items, persons, or activities subject to the EAR – across all industry sectors.

The challenge in implementing the BIS Affiliates Rules – or any indirectly applicable regulations – lies in the fact that companies need to obtain information on ownership structures proactively. 

For sanctions that apply directly, companies can screen the names of known business partners against sanctions lists. For sanctions that apply indirectly, however, companies must first identify unknown ownership or control structures of their business partners.

There are no official government lists available that can be used to directly verify ownership structures and affiliated companies. Publicly available data on this topic is highly fragmented and requires extensive research as well as multilingual capabilities to identify relevant data across different jurisdictions.

Ownership structures can be highly complex due to networks of joint ventures, subsidiaries, affiliated companies, and investment companies. Furthermore, they evolve extremely dynamically due to frequent mergers, acquisitions, and restructurings.

This complexity and dynamism mean that, in addition to known business partner data, further data must be repeatedly identified and verified. All of this makes manual research too slow, too inconsistent, and too difficult to verify.

The BIS Affiliates Rule makes automated compliance screening and ownership analysis increasingly important. Modern trade compliance software helps organizations to:

• Screen entities against global restricted lists
• Identify beneficial ownership relationships
• Detect indirect ownership structures
• Monitor changes continuously
• Reduce false positives
• Automate risk scoring
• Document screening decisions
• Maintain complete audit trails
• Integrate screening into ERP and logistics systems
• Stop shipments before violations occur

For global organizations managing high volumes of transactions, manual compliance processes are neither scalable nor reliable.