U.S. Commerce Department Unveils Game-Changing Export Control Rule

On Monday, the U.S. Commerce Department’s Bureau of Industry and Security (BIS) announced a long-awaited interim rule, signalling a significant shift in the enforcement of U.S. export controls. The new rule is expected to have far-reaching implications, including for non-U.S. companies.

Known informally as the new ‘affiliates rule,’ the new rule mirrors the U.S. Treasury Department’s OFAC 50% rule, but with a significant twist: it applies to entities listed on U.S. export control lists rather than sanctioned individuals. This rule harmonises export controls with sanctions enforcement in the U.S., placing both under a 50% rule.

See here for a detailed breakdown of the OFAC 50% rule.

What is the Export Control List?

An export control list is a governmental or regulatory document identifying specific goods, software, technology and expertise that requires a licence or other authorisation to be transferred or exported. These lists are created to prevent sensitive items, especially military and ‘dual-use’ items (goods with both civilian and military applications), from being misused by bad actors who threaten national security, and the proliferation of weapons of mass destruction and acts of terrorism.

What the New BIS ‘Affiliates Rule’ Does

Under the new affiliate rule, any entity that is 50% or more owned by one or more parties on the U.S. Entity List or Military End-User List will automatically be subject to the same export restrictions as the listed entities themselves. For more information on the U.S. Entity List, refer to the Commerce Department’s FAQ.

This means that subsidiaries and jointly owned companies are no longer in the clear simply because they are not directly named on export control lists. Ownership alone is now enough to bring an entity under the U.S. export control umbrella. This change represents a sweeping expansion of U.S. export compliance obligations.

The rule accordingly amends the “Know Your Customer” (KYC) Guidance and Red Flags under the Export Administration Regulations (EAR) to state clearly that exports, re-exporters and in-country transferors have a responsibility to know the ownership of foreign companies they do business with and must adopt a risk-based compliance program.

Why This Rule Matters – Key Implications

• Ownership Matters More Than Ever: The new rule effectively closes loopholes that might have allowed trade with entities with concealed ownership links (for example, through corporate restructuring) to entities on U.S. export control lists. This makes it significantly harder for bad actors to circumvent export restrictions, keeping pace with increasingly complex corporate structures and criminal tactics.
• Thousands of Firms Now Under U.S. Export Controls: The rule means that thousands of previously unaffected entities are now subject to U.S. export control regulations. Entities from all over the world, from Europe to the Middle East, will be implicated, making it essential for firms to confirm ownership of partners, clients, or suppliers regardless of jurisdiction.
• Impact Extends Beyond U.S. Borders: While this is a U.S. regulation, its global reach cannot be overstated. Non-U.S. companies, including banks, insurers and freight forwarders, could be held accountable if they facilitate business involving covered entities, particularly if U.S.-origin goods, software, or technology are part of the transaction.
• Ownership Due Diligence is Non-Negotiable: The rule imposes a new compliance burden for businesses across multiple sectors, especially for financial institutions, insurers and logistics providers. Organisations must bolster their due diligence procedures to capture risks associated with ownership structures and affiliations. Proper screening and monitoring are critical to ensuring they’re not inadvertently engaging with entities that have recently fallen under U.S. export restrictions due to their ownership ties.

Targeting Technology-Related Circumvention Linked to China and Russia

One of the key focuses of the new rule is to curb efforts by China and Russia to circumvent U.S. export controls, particularly around sensitive technologies and military dual-use items. These two nations comprise a large portion of the U.S. export control list, given concerns over national security, human rights and international conflict.

By targeting affiliates - entities that are not necessarily listed but controlled by sanctioned entities - the rule aims to disrupt indirect routes for acquiring U.S.-origin technology. For instance, Chinese and Russian companies have historically used intermediary firms, sometimes located in third-party countries, to obtain U.S.-made components or software that are subject to export restrictions.

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How AMAN Powered by Themis Can Help

The new BIS affiliates rule fundamentally changes the compliance landscape. Organisations should ensure they are implementing sophisticated ownership screening, network mapping and monitoring capabilities. AMAN is uniquely positioned to help firms navigate these expanded obligations through:

• Enhanced Due Diligence: Our platform enables comprehensive ownership structure analysis, helping you identify when potential counterparties fall within the 50% threshold bracket. We’re always committed to enhancing our data to provide the best coverage, such as partnering with Dow Jones to integrate their OFAC 50% entity list.
• Threat and Risk Intelligence and Investigations: Our Intelligence team provides in-depth due diligence investigations that can uncover beneficial ownership links or expose illicit use of corporate structures. Additionally, our Insight team offers comprehensive threat-based and jurisdictional risk research, including assessments of export control and sanctions risks.
• Real-Time Monitoring and Alerts: As ownership structures change and new entities are added to U.S. export control lists, our monitoring systems ensure you're immediately informed of any shifts that may affect your commercial relationships. This is critical given that thousands of entities became subject to these controls overnight.
• Training and Advisory Services: AMAN provides tailored training on the practical implications of the affiliates rule, including how to conduct ownership due diligence, recognise red flags and document compliance efforts effectively. We can help your teams understand not just what the rule requires, but how to operationalise these requirements efficiently.

Contact AMAN today to discuss how we can help your organisation adapt to these new requirements.

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