BIS 50% Affiliates Rule is Coming – Immediate Action is Crucial

U.S. Commerce Department Expected to Enforce New Rule in November

The U.S. Bureau of Industry and Security (BIS) is poised to implement a significant change to export regulations: the 50% Affiliates Rule. This rule will automatically extend restrictions to any company that is 50% or more owned, directly or indirectly, by any organization on the BIS Entity List, regardless of whether the subsidiary, joint venture, or related company is explicitly named.

Act now. Delayed compliance is the costliest option.

Don’t Wait for Enforcement to Begin

The BIS 50% Affiliates Rule aims to close loopholes that have allowed restricted entities to circumvent controls through majority-owned subsidiaries. Immediate action is crucial. To ensure compliance and avoid potential violations, consider the following:

• Expanded Compliance Scope: Thousands of subsidiaries in nearly 100 jurisdictions may now fall under export-control regulations, significantly increasing the number of entities requiring scrutiny.
• Complex Ownership Structures: The rule applies to indirect ownership through multiple layers, necessitating deeper analysis of corporate hierarchies.
• Enhanced Due Diligence Requirements: Traditional screening methods may be insufficient. Organizations will need to implement more robust systems to trace ownership and control relationships.
• Increased Enforcement Risks: Failure to comply with the new rule could result in significant penalties and reputational damage.

Descartes offers advanced screening solutions designed to navigate the complexities introduced by the BIS 50% Affiliates Rule:

• Comprehensive Ownership Screening: Identify and assess entities with complex ownership structures that may now be subject to restrictions.
• Real-Time List Updates: Stay informed with the latest changes to the Entity, MEU, and SDN lists, and related regulations.
• Automated Compliance Workflows: Integrate compliance checks seamlessly into your existing processes to ensure efficiency and accuracy.
• Expanded Export Licensing: Manage the full spectrum of export licenses and authorizations all within one powerful export license management system.

By leveraging Descartes, your organization can proactively adapt to regulatory changes, mitigate risks, and maintain uninterrupted operations.

• Comprehensive Ownership Screening
• Real-Time List Updates
• Automated Compliance Workflows