BIS Issues Interim Final Rule Extending Entity List Restrictions To 50% Ownership

On September 29, 2025, the Bureau of Industry and Security (BIS) implemented an interim final rule (IFR) amending the Export Administration Regulations (EAR) to broaden the reach of the Entity List. Published at 90 FR 47201, this rule significantly expands compliance obligations for exporters, reexporters, freight forwarders, and other parties subject to the EAR.

The Core Change: The 50% Ownership Rule

Until now, only entities explicitly named on the Entity List were subject to restrictions, with narrow exceptions for non-legally distinct branches. The new IFR introduces an Affiliates rule, under which any entity that is at least 50% owned, directly or indirectly, by one or more listed entities will automatically be treated as if it were on the Entity List.

This approach mirrors the Treasury Department’s Office of Foreign Assets Control (OFAC) “50 Percent Rule” and is designed to prevent diversionary practices, such as creating new companies to evade restrictions. The same standard now also applies to entities linked to Military End Users (MEUs) and certain sanctioned parties under EAR § 744.8.

Temporary General License (TGL)

To ease the transition, BIS issued General Order No. 7, a Temporary General License allowing limited transactions with certain non-listed foreign affiliates captured under the new rule. This TGL is short-lived, however—it expires November 28, 2025.

Compliance Implications

The Affiliates rule places a new affirmative due diligence burden on companies. Screening against the Consolidated Screening List (CSL) is no longer enough, since the CSL will not capture all affiliates newly subject to restrictions. Instead, exporters and forwarders will need to:

• Conduct ownership analysis to determine whether a foreign party is majority-owned by a listed entity.
  
• Treat “red flags” seriously when ownership structures are opaque or unavailable.
  
• Consider whether transactions require licenses or must be halted pending further review.

Violations remain subject to strict liability, meaning parties can be penalized even without knowledge of a restricted affiliate’s ownership ties.

Why This Matters

The rule represents one of the most sweeping procedural changes to the Entity List in years. Many long-standing compliance workflows—especially reliance on CSL-based name screening—will no longer suffice.

Because of the scope of these changes, BIS explicitly encourages industry to comment on the rule by October 29, 2025 (Docket No. BIS-2025-0017, RIN 0694-AK11).

Next Steps for Businesses

• Read the Rule in Full: The IFR is published at 90 FR 47201, and it includes numerous conforming amendments across EAR parts 732, 734, 736, 744, and 748.
  
• Evaluate Current Counterparties: Companies should revisit existing relationships with distributors, affiliates, and joint ventures to assess new risks.
  
• Seek Legal Guidance: The new ownership-based framework is complex. If you are unsure how the Affiliates rule applies to your business, contact a customs and export controls attorney for tailored advice.

As tariffs and regulations continue to evolve, navigating these changes requires experienced legal counsel. At Liang + Mooney, PLLC, our seasoned tariff lawyers can answer your questions and concerns with sophisticated legal solutions.  If you seek strategic counsel and insight into your operations, we invite you to contact us to schedule a consultation.