U.S. BIS Affiliates Rule FAQ

Arne Mielken
Oct 10, 2025
2 min read

🔒The BIS Affiliates Rule expands export controls to entities 50%+ owned by listed parties. We dive into the updated BIS Entity List FAQ

Key Features of the Affiliates Rule

1. Ownership-Based Scope

Only entities with ≥50% ownership by listed parties are automatically captured.
Indirect ownership is calculated at each tier: e.g., if Company A (listed) owns 50% of B, and B owns 50% of C, both B and C are subject to restrictions.
Minority stakes or other significant ties (board overlap, shared management) are Red Flags requiring enhanced due diligence.

2. Expanded Entity Coverage

Applies to foreign branches, offices, and non-legally distinct operations of listed entities.
Includes affiliates affected by Entity List, MEU List, SDN programs, and related FDP rules.

3. Most Restrictive Rule

If multiple restricted owners exist, the affiliate must comply with the strictest licensing, review, and exception policies of any of the owners.

4. Temporary General License (TGL)

Valid until 28 November 2025 for certain transactions involving covered affiliates, with conditions based on destination and ownership.
TGL does not apply if the affiliate is partially or fully owned by an SDN under §744.8.

5. Enhanced Due Diligence Requirements

Screening against the Consolidated Screening List (CSL) is no longer sufficient.
Exporters have an affirmative duty (Red Flag 29) to determine ownership of counterparties.
License applications must identify all affiliates, listed owners, and ownership percentages, including methodology and any gaps in available information.

Key Takeaways from Updated BIS FAQs

Ownership vs. Control

Entities under 50% ownership are generally not captured, but significant minority ownership or other ties still trigger Red Flags.

Branches and Offices Covered

Foreign branches or offices of listed entities are automatically subject to the parent entity’s license requirements.

General Prohibition 10

Remains a catch-all: prohibits dealings with entities acting as agents, fronts, or shells for listed parties.

Medical Facilities

Hospitals or medical centers owned by listed entities/affiliates are treated like any other entity under the EAR.

License Guidance

Must specify “50 percent ownership rule” in applications.
Provide ownership percentages, identifying listed entities and due diligence methods.
If percentages cannot be determined, describe listed owners and investigative steps taken.

Compliance Action Items

Review Transactions: Identify exports, re-exports, or transfers involving potentially covered affiliates.
Update Screening: Integrate ownership analysis; do not rely solely on CSL.
Strengthen KYC & Documentation: Capture direct/indirect owners, aggregate stakes, and Red Flag resolutions.
Reassess Relationships: Re-evaluate ongoing partnerships, JVs, or minority stakes linked to listed entities.
Consider Petitions: Affiliates with low diversion risk may request BIS to modify parent listings.
Prepare for Licensing: Ensure applications include all required ownership details and diligence records.

Compliance Action Items

Conclusion

The Affiliates Rule, reinforced by the updated FAQs, represents a major expansion of BIS’s enforcement authority and imposes significant diligence obligations on exporters and global partners. Immediate review of compliance processes, ownership verification, and screening procedures is essential to avoid violations.

Deadline for Public Comments: 29 October 2025