{"id":2216,"date":"2025-10-01T13:37:13","date_gmt":"2025-10-01T17:37:13","guid":{"rendered":"https:\/\/yormicklaw.com\/?p=2216"},"modified":"2025-10-01T13:53:48","modified_gmt":"2025-10-01T17:53:48","slug":"bis-publishes-50-rule-for-entity-list-and-meu-list-affiliates","status":"publish","type":"post","link":"https:\/\/yormicklaw.com\/es\/bis-publishes-50-rule-for-entity-list-and-meu-list-affiliates\/","title":{"rendered":"El BIS publica la norma 50% para la lista de entidades y la lista de afiliados de la MEU"},"content":{"rendered":"\t\t
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On September 29, 2025, the US Department of Commerce\u2019s Bureau of Industry and Security (\u201cBIS\u201d) issued an interim final rule implementing a 50% ownership threshold for affiliates of parties on the Entity List and Military End-User (\u201cMEU\u201d) List.

<\/p>

Similarity to OFAC\u2019s 50% Rule<\/em><\/h4>

The Expansion of End-User Controls to Cover Affiliates of Certain Listed Entities<\/em><\/span> is published in the Federal Register on September 30, but is effective September 29 when BIS filed the IFR for public inspection.<\/p>

The BIS \u201cAffiliates Rule\u201d largely mirrors the longstanding the Office of Foreign Assets Control (\u201cOFAC\u201d) 50% Rule. Previously, subsidiaries and affiliates of parties on the Entity List and MEU List were not automatically restricted, creating opportunities for diversion of US goods. According to industry analysis, hundreds of subsidiaries potentially impacted by this rule operate not only in China and Russia but also in major trade hubs such as the EU, UK, Singapore, Switzerland, Japan, Canada, Australia, and India.

<\/p>

New Compliance Obligations for Parties<\/em><\/h4>

The new \u201cAffiliates rule\u201d significantly expands US export control obligations for exporters, reexporters, transferors (in-country), freight forwarders, and financial institutions to address scenarios that have allowed unlisted subsidiaries to receive items \u201csubject to the EAR\u201d without a license or other authorization, although BIS is providing a Temporary General License (\u201cTGL\u201d) offering limited relief for certain transactions in Country Groups A:5 and A:6.

<\/p>

Key Points<\/em><\/h4>

Expanded Scope:<\/span><\/span> Any entity that is at least 50% owned, directly or indirectly, by one or more parties on the Entity List or MEU List is now subject to the same license requirements as the listed entities. For now, the Affiliates Rule is not being adopted for parties on the Unverified List (\u201cUVL\u201d) or those subject to a Denial Order.<\/p>

N.B., In the IFR, BIS states that it \u201cwelcomes comments on whether the 50 percent ownership threshold should be lower.\u201d<\/em><\/p>

Requirement to Clear New Red Flag 29<\/span><\/span>: In the IFR, \u201cBIS is also informing the public that foreign parties with significant minority ownership by, or other significant ties to (e.g., overlapping board membership or other indicia of control), an Entity List entity, an MEU List entity, or an SDN\u2026present a Red Flag of potential diversion risk to the listed entity.\u201d BIS expressly states that in this scenario, “additional due diligence is necessary<\/span><\/strong><\/em> especially given the opaque ownership structures and limited access to accurate ownership data in certain jurisdictions.\u201d (emphasis added).<\/p>

BIS has added Red Flag 29 to Supplement No. 3 to Part 732 to indicate that \u201cif an exporter, reexporter, or transferor cannot determine the ownership percentage of a foreign entity that is an entity owned by one or more listed entities on the Entity List or the MEU List, it must resolve the Red Flag prior to proceeding with any exports, reexports, or transfers (in-country) to the foreign entity, submit a license application to BIS, or identify an available license exception based on the restrictions applicable to the listed party.\u201d<\/span> <\/strong><\/em>(emphasis added).<\/p>

Strict Liability Penalty Risks:<\/span><\/span> Parties involved in the export, reexport, or transfer (in-country) of items \u201csubject to the EAR\u201d are always subject to BIS\u2019s strict liability administrative penalties. In the IFR, BIS drives home this point, emphasizing that \u201cdue diligence must be conducted to determine whether a foreign entity is an entity that is owned by one or more listed parties[,]\u201d and then goes on to state that the Affiliates Rule \u201ccreates an affirmative duty to determine the ownership of other parties to the transaction in order to comply.<\/span><\/strong><\/em>\u201d (emphasis added).<\/p>

Temporary General License (\u201cTGL\u201d):<\/span><\/span> BIS is adding General Order No. 7 to Supplement No. 1 to Part 736 to authorize certain exports, reexports, or transfers (in-country) as follows:<\/p>