Insights

On September 29, 2025, the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) unveiled the “Affiliates Rule,” a sweeping new measure designed to expand application of end-user controls (i.e., licensing requirements) to cover affiliates of certain listed entities. Under the BIS Affiliates Rule, if a company appears on one of BIS’s restricted-party lists (i.e., the Entity List or the Military End-User (“MEU”) List), its majority-owned affiliates would automatically become subject to the same export control restrictions.

The rule marked a decisive step toward closing what BIS has long seen as a critical loophole in export enforcement. Without the Affiliates Rule, listed entities could evade export control restrictions by channeling transactions through sister companies or newly formed subsidiaries that hadn’t yet been listed by BIS. The Affiliates Rule addresses this enforcement gap by making those affiliates of listed entities subject to the same licensing obligations from the outset. For exporters and re-exporters, this meant that due diligence must now include a review of a transaction party’s upstream ownership structure, a task that often requires specialized software, detailed analyses, and additional resources. However, just as companies were preparing to adjust to the new rule, the White House granted an unexpected reprieve (at least for one year).

The White House Pause

On November 1, 2025, the White House released a Fact Sheet outlining the terms of a new U.S.–China trade and economic agreement. Included among the tariff and market-access commitments was the statement: “The United States will suspend for one year, starting on November 10, 2025, the implementation of the interim final rule titled Expansion of End-User Controls to Cover Affiliates of Certain Listed Entities.”

That single line effectively put the Affiliates Rule on ice. Soon after, on November 11, 2025, BIS confirmed the one-year enforcement pause in a Federal Register notice stating that the pause on enforcement of the Affiliates Rule will remain in effect until November 9, 2026, absent a further extension of the enforcement pause. Thus, the Affiliates Rule remains on the books for now, but its enforcement clock won’t start ticking until November 2026 at the earliest.

What the Year-Long Pause Means for Companies

Exporters should keep in mind that the enforcement pause constitutes a timeout rather than a complete cancellation of the new Affiliates Rule. For industry, the suspension offers both relief and responsibility. Exporters now have twelve months to breathe, but also twelve months to prepare. The broad reach of the Affiliates Rule presents increased compliance risks that companies should start to assess and effectively mitigate now to prepare for implementation of the Affiliates Rule.

• Map potential exposure and high-risk areas. A key compliance task to undertake before the Affiliates Rule goes into effect is to understand how ownership ties could trigger licensing requirements under the new rule. Companies should consider whether their transactions involve entities that present elevated compliance risks due to their operation in a high-risk industry, location, or business dealings within restricted locations. These types of parties may present higher likelihood of having ownership ties to listed entities. Companies with long-term contracts with foreign counterparts or that have frequent exports to certain foreign parties should begin to screen the ownership structure of these parties to identify any compliance red flags and assess how the Affiliates Rule may impact relationships with key customers or other business partners.
• Develop and update screening systems. Many trade-compliance software tools are effective at conducting name-based screening against denied parties or sanctions lists, but not all provide the type of ownership mapping that will be needed to ensure compliance with the Affiliates Rule. The enforcement pause gives compliance teams the opportunity to build or test new screening systems that account for beneficial ownership risks. Companies can run pilot tests, fine-tune escalation procedures, and train staff all before enforcement begins.
• Contractual protections matter, too. Exporters should consider revisiting their sales and distribution agreements to require counterparties to disclose any ownership changes that would bring them under the 50 percent threshold. When the rule takes effect, that transparency could be the difference between continued business and a sudden license requirement. In addition, exporters may need to develop or update end-use and end-user certifications to include statements ensuring a party’s ownership structure does not contain listed entities.
• Bridge the gap between export-control and sanctions compliance programs. Because the Affiliates Rule borrows directly from Office of Foreign Assets Control’s (“OFAC”) 50% Rule, companies already applying the OFAC 50% Rule can align those procedures with BIS’s forthcoming requirements. Harmonizing the two frameworks now will make the eventual rollout of the BIS Affiliates Rule far smoother.

BIS’s introduction of the Affiliates Rule has made clear that the future direction of U.S. export controls intends to focus heavily on risks presented by corporate networks and upstream ownership structures. The one-year pause on enforcement of the BIS Affiliates Rule offers an important opportunity for companies to adjust and improve their compliance programs before the Rule comes into effect. Exporters should treat this year of reprieve as a preparation period and not wait until the Rule becomes effective to begin reviewing its implications. Companies that use this time to map ownership, update systems, and reinforce their contractual and procedural safeguards will be best positioned when enforcement begins in 2026.

***

If you have questions about the application of the BIS Affiliates Rule or compliance with U.S. export laws, please contact the attorneys at Torres Trade Law, PLLC.