BIS Affiliates Rule: 50 Percent Ownership in Export Controls

A Chinese semiconductor company sits on the Entity List. Its subsidiary in Malaysia does not. Until September 29, 2025, that subsidiary could receive EAR-controlled items without triggering a single licensing requirement. The BIS 50 percent rule, published as an interim final rule on that date (Federal Register, 90 FR 47201), closed the gap by extending Entity List and MEU List restrictions to any foreign entity owned 50 percent or more by a listed party. BIS suspended the rule 42 days later on November 10, 2025, but reimposition is already written into the Federal Register for November 10, 2026. Exporters now carry an affirmative duty to determine ownership of foreign counterparties before shipping.

BIS adopted the OFAC 50 percent ownership model on september 29, 2025

The BIS affiliates rule applies the same 50 percent ownership threshold that OFAC has used for SDN blocking since August 2014. If one or more parties on the Entity List, MEU List, or specified SDN designations own 50%+ of a foreign entity, whether directly, indirectly, or in the aggregate, that entity now faces the same export licensing requirements as the listed parent. Same license. Same review policy.

Before this rule, BIS operated on a "legally distinct" standard. Only entities specifically named on the Entity List faced restrictions. We've seen how this played out in practice. A listed entity in Shenzhen would register a procurement subsidiary in Singapore under a clean name. The Consolidated Screening List returned zero hits because the subsidiary was a separate legal person. The shipment cleared. The listed parent got exactly the items the Entity List was designed to deny it.

BIS had to chase each shell one by one. A listed company would spin up a new subsidiary, often in a jurisdiction where corporate registries are thin or pay-walled. BIS would investigate for months, then publish a new Entity List entry. By the time the entry went live, the next shell was already operational. The affiliates rule ends that loop.

The ownership math aggregates across lists, which catches teams off guard. An Entity List party holding 25% and an MEU List party holding another 25% of the same foreign company is enough to trigger the threshold. BIS then applies whichever upstream listed entity carries the most restrictive license requirements.

The one-year suspension ends november 9, 2026

BIS pulled the rule 42 days after publication. The final rule issued November 10, 2025, stayed all EAR amendments until November 9, 2026 (Federal Register, 90 FR 63298). A White House fact sheet on November 3 had telegraphed the move.

This is not a repeal. BIS published reimposition language in the same final rule. The identical provisions snap back into the EAR on November 10, 2026, absent a future extension. Every amendatory instruction is already printed.

We talk to export controls teams regularly, and what we heard after the November suspension was predictable: ownership screening projects got shelved, budgets got reallocated. That reaction throws away 8 months of preparation time. The companies that will scramble hardest in Q3 2026 are the ones treating the suspension as a cancellation. The September 29 effective date proved BIS will publish with zero transition period. Expect the same in November 2026.

BIS still expects diligence during the pause. The September 2025 FAQ remains on BIS.gov, and it "encourages" exporters shipping to affiliates of listed entities to verify items are not ultimately reaching the listed parent. When Commerce Secretary Lutnick calls BIS the "frontline" of great power conflict, that word "encourages" reads more like "expects."

How the BIS 50 percent rule differs from OFAC blocking

Same 50% threshold, different regulatory consequence. The OFAC 50 percent rule blocks all property and kills virtually any transaction with the blocked entity. The BIS rule is narrower: it triggers export licensing requirements only for items subject to the EAR. But both operate on strict liability, and we've seen companies assume the narrower scope means lower exposure. It does not.

The practical gap: many exporters of EAR99 items, products that normally ship without a license, never built OFAC ownership screening into their programs. They never had to. EAR99 to a clean-named buyer in a non-embargoed country did not require chasing UBO chains. The BIS affiliates rule changes that math entirely. Once reimposed, even EAR99 shipments to an unlisted foreign entity 50%+ owned by an Entity List party will require a license.

Where sanctions screening subsidiary ownership gets messy is the jurisdictional split. The EU lowered its ownership threshold from "more than 50%" to "50% or more" in July 2024 (EU Best Practices update), aligning with OFAC and BIS. The UK through OFSI still uses "more than 50%" and does not aggregate ownership stakes of different designated persons. We've run the same ownership chain through all three frameworks on behalf of clients and gotten three different outcomes. One entity blocked in the US, clear in the UK, in a grey zone under EU control criteria. Same company, same ownership data, three answers.

Ownership screening gaps that triggered the haas automation settlement

The Haas Automation enforcement action on January 17, 2025, is the case we point to when explaining why export controls ownership screening cannot stop at name-matching. BIS imposed a $1.5 million penalty. OFAC settled for $1,044,781. Combined: $2.5 million.

Haas makes CNC machine tools and sold parts through authorized distributors to end users in Russia and China. Total value of the 41 BIS-charged transactions: $29,254. Spare parts. Not large shipments. But those parts kept CNC machines running in facilities tied to Russia's defense sector.

Five of the six blocked Russian entities Haas dealt with were not on the SDN list by name. They were blocked because they were owned 50%+ by an SDN-listed parent (OFAC Enforcement Release). Haas ran names against the SDN. Clean hits across the board. Parts shipped. Nobody dug one layer deeper to check who actually owned those companies. The ownership math that would have caught them never ran.

OFAC called 8 of the 21 violations egregious. The pattern was specific: Haas failed to rescreen customers who got designated between an initial compliant sale and a follow-on order. A buyer was clean at first purchase. Parent entity gets added to the SDN list six months later. Haas ships spare parts to the same buyer without a second look. $29,254 in parts. $2.5 million in penalties — for ownership data that was one query away.

BIS tacked on an ongoing audit: Haas now pays an outside consultant for two annual program reviews. Screening once at onboarding does not survive contact with the Federal Register. Ownership structures shift, designations cascade through Entity List subsidiaries overnight, and there is no grace period. None.

Preparing export controls screening for the affiliates rule deadline

The November 2026 reimposition gives exporters roughly 8 months to close a gap that most screening programs were never built to address.

Standard restricted party screening checks names against the Consolidated Screening List. The affiliates rule asks a question that name-matching cannot answer: does a listed party own 50% or more of this unlisted foreign entity? Neither OFAC nor BIS publishes a list of entities restricted through the 50% rule. Figuring out Entity List affiliate relationships is the exporter's job.

BIS Red Flag 29, added September 2025, makes this obligation explicit. If you cannot determine the ownership percentage of a foreign entity that may be affiliated with a listed party, you face two paths: resolve the question through additional diligence, or do not ship. Strict liability basis. Not a grey area.

Aggregation catches teams that screen entity-by-entity. Two listed parties each holding 25% of one foreign company is enough. And indirect chains flow downstream without limit, which means a company three corporate layers removed from anything on a screening list can still trigger the rule if every link in the chain sits at 50%+.

One model that consistently breaks: annual beneficial ownership checks during onboarding. The October 2025 OFAC designation of Rosneft and Lukoil plus 34 named subsidiaries showed why. When OFAC drops a Friday afternoon designation, every entity the new SDN owns 50%+ becomes blocked that same day. Annual reviews leave a window of months between the designation and the next scheduled check. That window is where enforcement actions land.

Platforms like Lenzo pull ownership data against sanctions and export control lists to surface 50 percent ownership threshold exposures that name-only screening will never catch. The suspension bought time. It did not remove the requirement. Lenzo trade compliance platform tracks ownership chains against Entity List, MEU List, and SDN designations to flag affiliate exposures before November 2026 snaps the rule back into force.

FAQ

Does the BIS 50 percent rule apply during the suspension period?

No. BIS stayed all EAR amendments from the affiliates rule effective November 10, 2025, through November 9, 2026. Only entities specifically named on the Entity List or MEU List face list-based restrictions during this window. BIS does encourage heightened due diligence for transactions involving affiliates of listed entities, and OFAC's 50% rule remains independently active throughout.

How do I calculate indirect ownership under the BIS affiliates rule?

Follow the same method OFAC uses. If Listed Entity A owns 50% of Unlisted Entity B, and Entity B owns 50% of Unlisted Entity C, Entity C faces the same restrictions as Entity A. Ownership flows downstream through each 50%+ link. If any link drops below 50%, the chain breaks. Aggregate the stakes of multiple listed parties toward the 50% threshold, even across different lists.

What happens if I cannot determine a foreign counterparty's ownership?

BIS Red Flag 29 gives you a binary: resolve or refrain. If you know or suspect a foreign entity has ownership ties to a listed party but cannot confirm the percentage, either run the ownership to ground or walk away from the shipment. Proceeding without resolution while the affiliates rule is active creates strict liability exposure under the EAR.

Do OFAC ownership restrictions still apply while the BIS rule is suspended?

Yes. The BIS suspension touches only EAR-specific licensing triggered by affiliate ownership. OFAC's 50 percent rule for SDN blocking is a separate framework and stays fully active. An entity 50%+ owned by an SDN is blocked regardless of the BIS suspension.

Ownership thresholds now align across OFAC, BIS, and the EU at 50%. Companies already running OFAC ownership verification hold most of the infrastructure needed for BIS affiliate screening when the rule returns. Those who never built ownership screening, and that includes a significant share of EAR99 exporters who had no regulatory reason to until now, face the steepest build. Eight months, from zero, with the Haas settlement at $2.5 million as the price tag for getting it wrong.