BIS Affiliates Rule: What Exporters Must Do Before It Returns on November 10

The BIS affiliates rule is not in force today, and that is exactly why export compliance teams need to look at it now. The Bureau of Industry and Security issued it on 29 September 2025, stayed it six weeks later, and wrote the stay so that it ends on its own. Unless BIS publishes an extension, the rule comes back on 10 November 2026 with no further notice, no new comment period and no transition license on the books.

Once it returns, the license question no longer stops at the name on the purchase order. It extends to who owns the buyer, the intermediate consignee and the end user, through every layer of the corporate chain. This guide covers what the rule does, the Federal Register record, what BIS has and has not done since the stay, and a due diligence workflow to have running before the reinstatement date. Status verified against the Federal Register and eCFR as of 23 September 2026.

What the 50% Ownership Extension Covers

The rule, formally titled Expansion of End-User Controls To Cover Affiliates of Certain Listed Entities, makes the license requirements and other restrictions of certain BIS lists apply to any foreign entity owned, directly or indirectly, individually or in aggregate, 50 percent or more by one or more listed parties. It also reaches entities owned by unlisted companies that are themselves restricted because of their ownership, so the restriction travels down the chain.

Before the rule, BIS applied a legally distinct standard: restrictions reached the listed entity and its non-distinct branches in the same country, but not a separately incorporated subsidiary. The Affiliates Rule closes that gap.

Three lists, aggregated

The rule draws on three sources, and ownership is added up across all of them. A company owned 30 percent by one listed party and 25 percent by another is covered, because the two holdings total 55 percent. The same logic applies if one owner is on the Entity List and the other is on a different covered list.

• Entity List (Supplement No. 4 to Part 744), through 15 CFR 744.11(a)(1).
• Military End-User List (Supplement No. 7 to Part 744), through 744.21(a)(3). Affiliates owned solely by unlisted military end users are not captured unless the affiliate itself meets the military end user definition.
• SDNs designated under the OFAC programs listed in 15 CFR 744.8(a)(1), through 744.8(a)(2): the Russia, Belarus and Ukraine-related programs, the terrorism programs (FTO and SDGT), the WMD program (NPWMD) and the narcotics and criminal programs (ILLICIT DRUGS-EO14059, SDNT, SDNTK and TCO).

What the affiliate inherits

A covered affiliate is treated to the same degree as if the item were going to its listed owner. It inherits the owner’s license requirement, license exception eligibility and license review policy, which for many listed parties is a presumption of denial. Where several owners carry different requirements, the rule of most restrictiveness applies: the affiliate takes the strictest requirement of any of its owners regardless of how the percentages split. If only one owner qualifies for a license exception, the affiliate does not.

Foreign direct product rules follow the same path. The Entity List FDP rule at 734.9(e) and the Russia/Belarus military end user FDP rule at 734.9(g) extend to an affiliate when at least one owner carries the relevant footnote.

What it does not reach

The rule applies only to foreign entities, so a US subsidiary of a listed party is outside it. It runs downward to subsidiaries, not upward to a listed entity’s parent, although BIS flags parents as warranting diligence. It does not cover the Unverified List or Denied Persons. Affiliates of unnamed entities that merely operate at a listed address are excluded unless those entities are specifically named, and affiliates can request exclusion under 744.16(e) or 744.21(b)(2).

The test is ownership, not control. An entity that a listed party controls without owning 50 percent is not automatically captured, but significant minority ownership, overlapping board members or other indicia of control are red flags that call for extra diligence, and BIS can list such an entity in its own right.

The Federal Register Record Behind the Rule

Two documents define the rule’s legal status. The interim final rule appeared at 90 FR 47201 and the one-year suspension at 90 FR 50857. Every date an exporter needs to plan around comes from those two publications and the eCFR notes that implement them.

Suspension and Automatic Reinstatement Date

The suspension followed the US-China arrangement announced on 1 November 2025, under which China suspended its 9 October 2025 export controls and issued general licenses for rare earths, gallium, germanium, antimony and graphite. The stay is not limited to Chinese companies: it suspends every amendment the interim final rule made to Parts 732, 734, 736, 744 and 748.

The reinstatement mechanism is written into the suspension rule. The provisions removed on 10 November 2025 will be reimposed on 10 November 2026, effective indefinitely, absent a future extension. BIS did not consider the comments filed on the interim final rule when it issued the stay and said they will be considered in future rulemakings. Nothing about the return depends on a new publication.

What switches back on automatically

The eCFR carries effective date notes on each stayed provision, all citing 90 FR 50857 and all reading effective until 9 November 2026. On 10 November 2026 these return:

• Red Flag 29 in Supplement No. 3 to Part 732.
• The ownership extensions in 744.8(a)(2), 744.11(a)(1) and 744.21(a)(3).
• The exclusion request paths in 744.16(e) and 744.21(b)(2).
• The revised introductory text of Supplements No. 4 and No. 7 to Part 744, and all of Supplement No. 8 to Part 744.
• Paragraph (g) of Supplement No. 1 to Part 736, the temporary general license text, whose codified end date of 1 December 2025 has already passed.

What BIS has and has not done since

Between 13 November 2025 and 23 September 2026 BIS published 65 documents in the Federal Register. None of them extends, modifies or finalises the Affiliates Rule. The eCFR text of 744.8, 744.11, 744.21 and Supplement No. 8 has not changed since 12 November 2025. BIS has not published a replacement for the lapsed temporary general license.

An extension could still arrive before 9 November 2026, by Federal Register notice or as the outcome of a trade negotiation. Planning for reinstatement is the only position the published record supports.

What applies during the stay

Until 9 November 2026 the pre-rule legally distinct standard governs Entity List, MEU and 744.8 scope. That is not a free pass. An agent, front company or shell acting for a listed entity can still create a violation under General Prohibition 10 and 15 CFR 764.2(b), and the OFAC 50% rule is untouched because the stay covers only EAR amendments.

Ownership Due Diligence Steps for Exporters

BIS stated in the interim final rule that exporters have an affirmative duty to determine the ownership of other parties to the transaction and must adopt a risk-based compliance program. The rule is strict liability: knowledge is not required to trigger the license requirement, although it weighs in penalty calculations. A workable program answers five questions for every foreign party.

1. Identify every party, not just the buyer

The rule applies to purchasers, intermediate consignees, ultimate consignees and end users as defined in 748.5(c) through (f). A restricted affiliate acting as your foreign freight forwarder or purchasing agent makes a license necessary even if the end user is clean.

2. Screen, then screen for ownership separately

BIS states that the Consolidated Screening List is no longer exhaustive for these purposes. A name match against the CSL answers whether a party is listed. It does not answer whether a party is 50 percent owned by listed parties. Tooling built for restricted party screening handles the first question; the second requires ownership data that traces shareholders through each layer and adds up holdings across the Entity List, MEU List and covered SDN programs.

3. Resolve Red Flag 29

Red Flag 29 applies when an exporter knows that a foreign party has owners on the Entity List or MEU List, or owners restricted through their own ownership. The exporter must determine the percentage those entities own; if that is not possible, it must obtain a BIS license unless a license exception is available.

4. Make the license determination on the owner's terms

Apply the owner’s license requirement, exception eligibility and review policy, using the rule of most restrictiveness where there are several owners, and check FDP footnotes. On a BIS-748P, Block 9 (Special Purpose) must carry the regulation’s wording, Affiliates rule, and name the listed owners, their percentages and the method used to determine them, or explain the diligence performed and why it failed.

5. Document it and carry it into the export filing

Keep ownership analyses and screening records under Part 762. The EEI must show the correct license authority (license number, exception symbol or NLR) and is mandatory for any EAR export requiring a license application, regardless of value or destination. A false statement on the EEI can itself violate 764.2(g). A documented trade compliance management process that ties the ownership file to the filing is what holds up under review.

Most Exposed Industries and Red Flags

Exposure under the rule depends on ownership, not on sector or product, and no primary source ranks industries. The product classification decides whether an item is subject to the EAR and what license requirement attaches. The Affiliates Rule adds a second question: who owns the party receiving it. For exporters of controlled technology, machinery, electronics or chemicals, that question now applies to every foreign counterparty in any country.

The published record does point to where ownership problems cluster. The stay followed the US-China arrangement. The 744.8 programs bring in Russia, Belarus and Ukraine-related SDNs, and the Russia/Belarus MEU FDP rule extends to affiliates. The same section covers terrorism and narcotics programs, including the TCO and ILLICIT DRUGS-EO14059 designations, which brings counterparties in Mexico and Latin America into scope where ownership links exist. BIS also names logistics companies associated with high volumes of diversion among the high-risk addresses on the Entity List. The July 2026 move of the UAE to Country Group A:5 at 91 FR 43034 does not change any of this, because the rule has no country carve-out.

• A counterparty that will not disclose its shareholders or ultimate beneficial owners.
• A listed party holding a significant minority stake, even below 50 percent.
• Board members or officers shared with a listed entity.
• A proposed foreign forwarder, distributor or purchasing agent with any ownership link to a listed party.
• A newly formed entity or recent ownership change shortly before an order.
• Several listed shareholders whose individual stakes look small but add up.

Interaction With the OFAC 50% Rule

BIS modelled the rule on Treasury practice. Both regimes aggregate holdings across multiple listed owners, count indirect ownership and look at ownership rather than control. The effects differ, and a program built only around OFAC will miss parts of the BIS rule. One overlap removes duplicate work: for SDN-owned affiliates captured through 744.8, an OFAC general or specific license or exemption satisfies the EAR requirement.

Penalties and Who Carries the Liability

Violations are enforced under the Export Control Reform Act at 50 U.S.C. 4819. Criminal penalties reach a fine of up to $1,000,000 and, for individuals, up to 20 years in prison, or both. The civil penalty is the greater of the statutory amount or twice the value of the transaction; the inflation-adjusted maximum in the current eCFR at 15 CFR 6.3(c)(6) is $374,474 per violation. Because the rule is strict liability, the absence of knowledge does not prevent a violation, but knowledge does factor into how BIS calculates the penalty.

Liability is not confined to the exporter of record. BIS stated in the interim final rule that freight forwarders and financial institutions may also have compliance obligations, and 15 CFR 758.3 provides that all parties must comply and that using an agent does not in itself relieve anyone of responsibility. In a routed transaction the US principal party in interest remains the exporter unless the foreign principal party in interest assumes licensing responsibility in writing.

This is a licensing question, not a cost allocation, and it does not follow the commercial terms that decide who pays export duties on a shipment. Exporters working with a forwarder on import and export logistics should agree who screens which parties and who holds the ownership file. The inbound regimes, customs brokerage and the rules on prohibited and restricted imports, are separate; the Affiliates Rule sits entirely on the export side.

Pre-Reinstatement Checklist for Export Compliance Teams

Seven weeks separate the date of this update from the reinstatement date. The table below orders the work so that the highest-risk counterparties are cleared first. It is a planning framework, not legal advice; for specific transactions, particularly license applications or voluntary disclosures, consult export control counsel.

Teams that want a second set of eyes on their counterparty list or their screening workflow can work through it with our trade advisory team before November.

Frequently Asked Questions