BIS “Affiliates Rule” Suspended One Year, But No Time to Rest

On November 10, 2025, the U.S. Bureau of Industry and Security (“BIS”) delayed the effective date of its new Affiliates Rule for a one-year period, until November 9, 2026, after U.S. and China trade talks. The Affiliates Rule, announced on September 29, 2025, expands export controls under the Export Administration Regulations (“EAR”) to extend to non-listed “affiliates” owned or controlled by listed entities (on the Entity List, the Military End User List “MEU”, or certain sanctioned parties) 50% or more in the aggregate. 

While the Affiliates Rule is meant to mirror the current Office of Foreign Assets Controls (“OFAC”) 50 Percent Rule on sanctioned individuals and companies, it is a direct reversal of the “legally distinct” standard that legal guidance to the trade community has been based on for many, many years. In practice, the Affiliates Rules requires a deeper dive into ownership structure of end users, which is not always the easiest to locate and can be unreliable depending on the source. Third party software providers can help but come with a hefty price tag. As such, the one-year delay of the Affiliates Rule is undoubtedly a welcome gift this holiday season, despite being wrapped in uncertainty – given that BIS has left the door open to future postponements. 

Exporters willing to be proactive should use this borrowed time wisely and begin making modifications to current export compliance processes. To name a few:

1. Exporters can begin gathering ownership structure charts/information for end users and begin screening majority ownership. Depending on your client list, this could take a while. 
2. With many Fiscal Years coming to an end, now is the perfect time to conduct budget discussions for third party software to enhance ownership visibility for the coming year. 
3. Familiarize yourself with the Entity List, the Military End User List, and the listed sanctions program identifiers. Run some of your biggest customers through a search of the list and determine whether a relationship needs further diligence efforts. 
4. Update your Terms and Conditions and End User Certificates to include language speaking to the Affiliates Rule requirements. 
5. Put your end users of concern on notice and conduct internal meetings to determine whether you will seek a license or end the relationship. *Note: BIS may still deny your license application, so have a contingency plan for winding down operations. 
6. For pivotal long-standing relationships that could be implicated, start the license application process now, so that when the Rule becomes effective, the license application is ready to go. 
7. Monitor BIS for updates, set calendar reminders leading up to the end of the delay period to find out if another postponement has been published. 
8. Determine which markets are at higher risk than others and prioritize them, either by geographic location or product offering, and tackle higher risk areas first. 

Although a temporary general license was created at the outset in September, there is no guarantee that another such temporary general license will take effect upon expiration of the one-year postponement. Now, another scary thought: with the volatility of the current trade environment, this postponement is at the whim of trade discussions going well. If they don’t, the Affiliates Rule postponement could end sooner than expected. Will you be ready?

Make no mistake, these actions are meant to create a higher burden of due diligence in export transactions to reduce risk of diversion to listed entities. With this higher burden, the trade community can anticipate heavy enforcement by BIS and take requisite steps now.