As of September 29, 2025, the Bureau of Industry and Security’s (BIS) interim final rule treats any foreign entity that is 50% or more owned – directly, indirectly, or in aggregate – by parties on the Entity List or MEU List, or by select Specially Designated Nationals (SDNs), as though it were listed itself. This new regulation, known as the Affiliates Rule, extends ownership-based risk to export controls, and shifts compliance from static list checks to continuous ownership intelligence.
This guide explains how Kharon and e2open work together to help you adapt quickly and credibly, without disrupting your existing workflows.
Why ownership intelligence is now mission-critical
Name-only screening cannot detect multi-tier ownership structures, joint ventures, new affiliates, or complex shareholder cascades. The Affiliates Rule requires aggregating ownership across various listed parent companies, tracking indirect holdings, and providing justification for licensing or stop-shipment decisions. This necessitates reliable data, automated decision-making processes, and audit-friendly workflows.
What changed and why it matters
BIS is bridging a long-standing gap in the enforcement of evasion. Previously, Entity List restrictions targeted only explicitly named entities, excluding subsidiaries, joint ventures, and affiliates. Now, if a listed party owns 50% or more, either alone or jointly, the affiliate adopts the strictest licensing policy of its parent entities. This change results in more rigorous license requirements, tighter review procedures, and greater scrutiny of the actual ownership of your counterparties.
From static lists to ownership intelligence
For years, exporters relied on the Consolidated Screening List (CSL) for control checks. However, BIS now emphasizes that this approach is insufficient. Companies must identify complex ownership structures (including indirect holdings), total up ownership from multiple listed parent companies, and enforce the strictest licensing policies when certain thresholds are exceeded.
How Kharon enables compliance with the BIS 50% (“Affiliates”) Rule
Kharon equips organizations with the data and tools to navigate evolving export controls reliably and comprehensively. Their platform combines advanced technology, AI, and a team of multilingual subject matter experts and data scientists.
Kharon data provides unrivaled visibility into complex risk networks
- Mapping majority-owned subsidiaries: Identify entities owned ≥50% (directly, indirectly, or in the aggregate) by BIS Entity List or MEU List parties, or by SDNs under specified programs, using enriched data from public sources across jurisdictions.
- Opaque ownership & hidden risk: Assess exposure from minority or unknown ownership and control by listed parties, recognizing diversion risks below 50%, especially in sensitive sectors and joint ventures.
- Beyond the rule: Illuminate diversion pathways, military end users and their subsidiaries, and outbound investment risks, enabling proactive controls even when entities aren’t explicitly listed.
From intelligence to action with e2open
Great intelligence only matters if you can operationalize it. E2open embeds ownership-based risk decisions directly into your daily operations:
- Due Diligence Screening with Global Knowledge®: Continuous list monitoring, advanced matching, and configurable risk policies; optional Global Trade Managed Services for expert case resolution when volumes spike.
- Partner Export Hold: When Kharon flags a covered affiliate risk, e2open automatically places a Partner Export Hold requiring license review where clients can use a clear hold reason (e.g., “BIS 50% Affiliates Rule – license required”). This hold is separate from Enhanced Due Diligence and can be released at the transaction once a license is granted or risk is cleared.
- Export Management: Route flagged orders for license determination; apply the most restrictive licensing policy implicated by the parent(s); generate documentation and maintain auditable decisions.
- Classification & content alignment: AI-assisted classification and Global Knowledge® alignment ensure product controls and licensing triggers match the latest rules.
Usage note: Customer approaches will vary. Some may cease all business with covered affiliates; others may pursue a license to continue. The Partner Export Hold supports both strategies without disrupting the wider order flow.
BIS vs. OFAC at a glance
- BIS 50% Affiliates Rule: Automatic EAR license requirements apply to entities ≥50% owned (direct/indirect/aggregate) by Entity List/MEU parties and select SDNs; adopt the most restrictive parent policy.
- OFAC 50% Rule: Automatic blocking once SDN ownership ≥50% (direct/indirect/aggregate); broad transaction prohibition.
Why does this matter? BIS now expects ownership look-through similar to OFAC’s standard, but the consequence is licensing, not blocking. You must aggregate ownership stakes across multiple listed parents, monitor changes, and apply the strictest rule set – then show your work.
Most impacted industries (and what “good” looks like)
Semiconductors & advanced electronics
Why: Complex cross-border ownership; high diversion risk for dual-use items.
Good looks like: Automated multi-tier Ultimate Beneficial Owner (UBO) tracing; Joint Venture (JV)-specific attestations; per-item ECCN checks and license routing.
Aerospace & defense supply chain
Why: Dual-use components; deep tiering; frequent subcontracting.
Good looks like: End-user/end-user statements tied to ownership flags; program-level holds; supplier re-screening before shipment.
Telecommunications & 5G/AI infrastructure
Why: JV-heavy deployments; state-linked investors; rapid entity formation.
Good looks like: Continuous partner refresh; site-level screening; aggregation of multiple listed parents’ stakes.
Financial services (trade finance, project finance, VC/PE)
Why: Indirect exposure through financed entities and collateral chains.
Good looks like: Look-through on financed counterparties; automated alerts on ownership changes; covenants for divestiture triggers.
Oil, gas & new energy (incl. batteries/EV materials)
Why: Multinational affiliates; complex JV structures; strategic commodities.
Good looks like: Concession/asset-level screening; cargo by cargo controls; license pre-clearance windows.
Automotive & EV supply chains
Why: Multi-tier suppliers spanning sensitive tech and materials.
Good looks like: Tier-2/3 supplier mapping; contract clauses for ownership change; exception-based audits.
Cloud, data centers & advanced computing services
Why: Servicelayer exposure to controlled technology and end use.
Good looks like: Customer onboarding with UBO proof, service SKU gating to license status, geo-fencing, and usage controls.
Life sciences & medical devices
Why: Dual-use lab equipment and components; distributor networks.
Good looks like: Distributor ownership attestations, serial-level traceability, and a recurring re-verification cadence.
Step-by-step guide to operationalize the Affiliates Rule
Goal: Enable ownership-based screening and licensing decisions with an auditable trail – without derailing your order flow.
1) Define the policy and risk appetite
- Document how you’ll handle ≥50% ownership (direct/indirect/aggregate) and sub-50% control indicators.
- Decide when to cease business vs. pursue a license; align with counsel.
2) Centralize reliable data
- Integrate Kharon data (ownership, control, military end users, diversion pathways) into your partner master.
- Normalize parent-affiliate linkages, store source evidence.
3) Configure screening & enrichment
- In e2open Due Diligence Screening, enable continuous monitoring.
- Enrich matches with Kharon ownership chains and risk context to reduce false positives.
4) Turn on automated holds
- Use Partner Export Hold for matches to the Affiliates Rule; set an apparent hold reason (e.g., “BIS 50% – license required”).
- Keep this separate from RPS to avoid blocking unrelated flows; allow transaction-level release after review.
5) Map products and controls
- Confirm ECCNs/classifications for impacted SKUs using Global Knowledge® and AI-assisted classification.
- Tie license requirements to product and partner combinations.
6) Apply the “most restrictive parent” logic
- Aggregate ownership across multiple listed parents; if ≥50% in total, inherit the strictest policy.
- Document the calculation and source data for audit.
7) Route to licensing & decisioning
- In Export Management, capture end-use statements, technical parameters, and program details.
- Where appropriate, file for a license; otherwise, execute a controlled stop ship with rationale.
8) Use the temporary relief window wisely
- If applicable, leverage the 60-day Temporary General License (TGL) for defined A:5/A:6 scenarios running until December 1, 2025.
- Build remediation plans (alternate suppliers, license submissions, or exits) before the TGL expires.
9) Monitor, refresh, and alert
- Schedule periodic ownership refresh; subscribe to change alerts from Kharon.
- Re-screen counterparties before shipment for high-risk lanes. With e2open, you ensure a 24/7 screening and rescreening of your partners.
10) Evidence and reporting
- Maintain a complete audit trail: ownership diagrams, calculations, policy applied, decision outcomes, and license artifacts.
- Track KPIs: hold to release cycle time, % partners with verified UBO, false positive rate, # licenses filed/approved.
What to do now
- Audit top counterparties for multi-parent aggregate ownership.
- Enable Partner Export Hold with clear reasons and approvers.
- Prioritize high-risk sectors and lanes; prepare license packages.
- Plan beyond the TGL window for A:5/A:6 scenarios.
We can help. E2open + Kharon delivers the intelligence, automation, and auditability to navigate the Affiliates Rule with confidence, without slowing the business. Contact us to learn more.
This article provides general information and is not legal advice. For specific guidance, consult qualified counsel.
Written by Dr. Johannes Hangl (@Dr.Johannes Hangl)
If you want more information or get a tool to support you with your global trade operations please visit www.e2open.com(@e2open)
Disclaimer: This article offers general information and should not be regarded as legal or trade compliance advice. For specific guidance, please consult a qualified professional.
FAQ: BIS Affiliates Rule
What is the BIS Affiliates Rule?
The BIS Affiliates Rule requires companies to treat any entity that is 50% or more owned (directly, indirectly, or in aggregate) by listed parties as if it were listed itself. This means stricter licensing requirements and deeper ownership screening.
How does this rule differ from OFAC’s 50% Rule?
While OFAC’s rule results in automatic blocking of transactions, BIS’s rule triggers licensing requirements. You must aggregate ownership across multiple listed parents and apply the most restrictive licensing policy.
Why is ownership intelligence critical now?
Traditional name-only screening misses complex ownership structures, joint ventures, and indirect control. The Affiliates Rule demands continuous monitoring and justification for licensing decisions.
How do Kharon and E2open support compliance?
Kharon provides enriched ownership data and risk intelligence. E2open operationalizes this intelligence through automated holds, license routing, and audit-ready workflows using tools like Global Knowledge® and Export Management.
What industries are most impacted?
Industries with complex ownership and dual-use technologies—such as semiconductors, aerospace, telecommunications, financial services, energy, automotive, cloud infrastructure, and life sciences—face the highest risk and compliance burden.
What is the Temporary General License (TGL)?
The TGL offers a 60-day relief window for certain A:5/A:6 scenarios. It allows companies to continue specific transactions while preparing for full compliance. The window closes December 1, 2025.
What should companies do now?
- Audit counterparties for aggregate ownership
- Enable Partner Export Holds
- Prioritize high-risk sectors
- Prepare license packages
- Plan beyond the TGL expiration
