On September 29, 2025, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) implemented a new Affiliate Rule through an Interim Final Rule (IFR), significantly expanding the scope of export controls under the Export Administration Regulations (EAR).
The Affiliate Rule extends existing restrictions under the Entity List, Military End User (MEU) List, and § 744.8 end-user controls to cover entities that are 50% or more owned, directly or indirectly, individually or in the aggregate by restricted parties. This measure aims to prevent circumvention and diversion through affiliates and mirrors the “50% rule” already used by OFAC. Entities owned by multiple restricted parties will face the most stringent license requirements and eligibility limitations.
Key impacts on exporters, reexporters, and transferors include:
- Enhanced due diligence requirements, as the Consolidated Screening List (CSL) is insufficient for ownership screening.
- New Red Flag obligations, requiring ownership verification and documentation.
- Updated licensing application procedures, indicate “Affiliates rule” in Block 9, and include the names of all listed parties, describing the due diligence performed and the percentage of ownership if known.
- Expansion to the Foreign Direct Product Rules (FDP), parts 734.9(e) and 734.9(g) now also include the Affiliate Rule language to impose restrictions.
- A Temporary General License (TGL) for certain non-listed foreign affiliates of listed entities, valid until December 1, 2025.
The IFR also includes a narrow and now-expired saving clause applicable only to shipments already in transit as of September 29, 2025.
Overall, these changes impose heightened compliance burdens, particularly on small and medium-sized enterprises, and require more robust screening and licensing practices to address expanded affiliate restrictions.
