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

The BIS Affiliates Rule – also known as BIS 50% rule or Entity List 50% rule – is a US export control rule that extends certain Entity List restrictions beyond companies that are named directly on the Entity List, the Military End-User List, and the Specially Designated Nationals (SDN) List.

In simple terms, this means a foreign company may also be subject to these restrictions if it is owned 50% or more – directly, indirectly, or in aggregate – by one or more restricted entities covered by the rule.

Companies that export, reexport, or transfer items subject to the US EAR therefore need to look beyond the name of a business partner and also check ownership structures. If ownership cannot be clearly determined, exporters, re-exporters, or transferors may need to resolve the red flag or obtain a BIS license before proceeding.

For more details and the official wording, refer to 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.

Historically, BIS applied Entity List restrictions only to specifically named entities and non-legally distinct branches. This created a major compliance gap. Organizations could potentially circumvent restrictions by operating through subsidiaries, affiliates, or ownership structures that were not explicitly listed. BIS therefore introduced the Affiliates Rule to:

• Reduce diversion risks
• Prevent circumvention of export controls
• Align with OFAC ownership screening standards
• Increase transparency expectations for exporters
• Strengthen national security enforcement

The new rule represents one of the most important changes to US export compliance screening in recent years.

The rule matters for companies around the world that deal with US items (commodities, software, and technology) and activities subject to the US Export Administration Regulations (EAR).

The scope of the US EAR is defined in Part 734

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

This includes companies that:

• Export, re-export, or transfer US-origin items
• Trade in foreign-made products containing US-controlled items (as regulated in §734.4, either in any quantity or in quantities exceeding the de minimis levels)
• Reexport or transfer foreign-direct products under the Foreign-Direct Product (FDP) Rules – i.e. certain foreign-produced items that incorporate US technology or are manufactured using US equipment as regulated in §734.9
• Engage in activities by US persons (no matter where they are located) 
• Engage in activities by US or foreign persons when those activities are prohibited by an order issued under the EAR, including a Denial Order issued under §766 of the EAR

This means any company (anywhere in the world) that deals with US items and activities subject to the EAR is potentially affected by restrictions under the BIS Affiliates Rule. It’s worthwhile noting that this also includes items classified under EAR99. You can learn more about when US re-export control law under the EAR applies in these articles:

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

The rule applies globally — not only to US companies, but to any company dealing with items subject to the EAR. This affects companies across industries, but the impact of the rule may be especially relevant for:

• Semiconductors, chips, and wafers
• Quantum computing
• Aerospace and defense
• High-tech and electronics
• Industrial manufacturing
• 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 is not only knowing that the rule exists and creating awareness of it across all units and subsidiaries of an organization. The most significant challenge lies in reliably and efficiently operationalizing it. 

Traditional restricted-party screening answers one question: "Is this exact party listed?" The BIS Affiliates Rule adds more difficult questions about who owns specific customers, suppliers, consignees, end users, resellers, or intermediaries — and whether direct, indirect or aggregate ownership is 50% or more. 

Official government lists are not available to directly screen ownership structures and affiliated entities. Public data on the topic is highly fragmented and requires extensive research and multi-language capability to identify relevant data across jurisdictions. 

Ownership structures can be very complex due to networks of joint ventures, subsidiaries, affiliates, and investment firms. They are also highly dynamic due to frequent mergers, acquisitions, and restructurings. 

This complexity and dynamism add a massive bulk of data to check in addition to existing business partner records and transactions. All this combined renders manual research as too slow, too inconsistent, and too difficult to audit.

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

• Screen parties 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 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.