In late September, the U.S. Bureau of Industry and Security (BIS) issued a sweeping expansion to U.S. export control regulations known as the Affiliates Rule or the BIS 50% Rule. This new regulation automatically extends export restrictions to any foreign entity that is at least 50% owned by one or more parties listed on the Entity List, the MEU (Military End User) List or select OFAC SDN (Specially Designated Nationals) programs.
In simple terms: Even if a company isn’t explicitly named on a BIS list, it may now be treated as if it were if its ownership crosses that 50% threshold.
This development has major implications for exporters, compliance teams, freight forwarders and international trade professionals. But soon after the rule was published in the Federal Register, U.S. officials announced a one-year suspension as part of its trade negotiations with China.
So what now?
To help make sense of it all, we hosted a free webinar featuring international trade attorney Lindsay Bernsen Wardlaw of Gibson, Dunn & Crutcher, who walked through the rule’s details, practical impacts, key red flags to watch for and what exporters should be doing right now—even during the delay. Watch the full webinar recording here:
Or, keep reading to learn more about what was covered during the webinar.
What Is the BIS 50% Rule?
The BIS 50% Rule expands the reach of export restrictions by applying them not only to parties explicitly named on restricted lists but also to:
- Unlisted companies that are at least 50% owned (directly or indirectly) by one or more listed parties.
- Ownership aggregation applies—meaning multiple restricted parties can combine to hit the 50% threshold.
- The most restrictive export controls applicable to any of the listed owners now apply to the affiliate.
This mirrors the OFAC 50% Rule used for sanctions enforcement, but introduces added complexity due to BIS’s multiple lists and differing license requirements.
Which Lists Are Covered?
The BIS 50% rule applies to parties listed under:
- The Entity List
- The MEU (Military End User) List
- A subset of OFAC's SDN List, specifically parties covered under Section 744.8 of the EAR (e.g. Russia, Iran)
Notably, the rule does not apply to:
- The Unverified List (UVL)
- The Denied Persons List (DPL)
- Military Intelligence End Users (MIEU) described in Part 744
- Address-only entries on the Entity List
- U.S. entities (only foreign parties are covered)
Why It Still Matters During the Delay
Although implementation is postponed for one year, exporters cannot afford to ignore this rule:
- The delay is temporary. It may snap back earlier, or be reinstated in full next year.
- Uncertainty remains. At any time the rule could be adjusted so the delay applies only to Chinese entities.
- Compliance takes time. It may take months to update screening processes, contract language and training programs. Now is the time to prepare.
Using End-User Certificates to Address Ownership Risk
End-user certificates (EUCs) are a smart compliance tool for all your exports. A well-structured EUC helps document the intended use of your goods, verify the end user’s identity and support your due diligence obligations under U.S. export control regulations.
- Consider adding ownership declarations. While not always required, asking counterparties to disclose direct and indirect ownership can help identify potential red flags under the BIS 50% Rule.
- Review your EUC library. Many companies rely on past EUCs from distributors or customers—but older certificates may point to affiliates that are risky under the 50% Rule.
- EUCs are a complement—not a substitute—for screening. Use them alongside your restricted party screening tools to create a stronger, more defensible compliance process.
How to Get Ahead of the Rule
Here’s how compliance teams can begin preparing today, so they’re prepared whenever the rule is in full effect:
- Map ownership of your high-risk counterparties (especially in China, Russia and MEU-listed countries)
- Review and revise EUCs and distributor agreements
- Update your training and compliance manuals
- Evaluate third-party screening tools to see if they include ownership data
Even if you don’t make changes right away, having a plan in place protects your company from being caught flat-footed.
Stay Vigilant with Restricted Party Screening (Even While the Rule Is Paused)
While the BIS 50% rule is temporarily delayed, enforcement of existing restricted party rules continues.
Exporters must still screen every customer, partner and transaction against dozens of U.S. and international denied party lists.
Shipping Solutions Restricted Party Screening Software makes this process faster, easier and more reliable:
- Screen against 200+ denied party lists from U.S. and international agencies
- Get detailed match results so you can make informed decisions
- Updated daily to reflect the most current data available
Start a free trial today.
Keep Preparing—Even During the Pause
The BIS 50% Rule may be on hold, but the expectations for compliance are not. Now’s the time to update your internal processes, tighten documentation and ensure your screening tools are ready.
Watch the full webinar recording for more insights and specific examples of how to determine ownership.
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