The "Hidden" Lists
When an entity is added to the Bureau of Industry and Security (BIS) Entity List, the restriction is clear: you generally cannot ship controlled items to them without a license. But what about their subsidiaries? What about their sister companies?
Unlike the Treasury Department's OFAC, which has long enforced a strict "50 Percent Rule" covering all downstream subsidiaries, BIS has historically had no equivalent ownership rule. BIS adopted one in September 2025 — the Affiliates Rule — but it was stayed before it took hold and is scheduled to become operative on November 10, 2026 (see the status note above).
So the ownership shortcut is not what binds you today. What binds you today is the older, broader standard below: "acting on behalf of." It does not depend on a percentage, and it has never been suspended.
Acting on Behalf Of
The core legal principle at play is "acting on behalf of." Under the Export Administration Regulations (EAR), you are prohibited from knowingly exporting items that will be used in violation of the regulations (General Prohibition 10).
The Risk Scenario
Blocked Company A cannot buy from you. So, they instruct their non-listed Affiliate Company B to buy the items. If you ship to Company B knowing (or having reason to know) the items are for Company A, you have violated the EAR just as if you shipped to Company A directly.
Identifying Affiliation Risks
Since BIS does not publish a complete list of every affiliate of every restricted party, the burden of "Know Your Customer" (KYC) falls on you. You need to look for:
- Common Ownership: Does a restricted party own stock in your customer? (See our 50% Rule Guide)
- Shared Management: Do they share directors, officers, or key managers?
- Shared Infrastructure: Do they use the same physical address, email domain, or IP address?
- Control: Does the restricted party have veto power or operational control?
The "Red Flag" Standard
BIS guidance explicitly states that transactions with affiliates of listed parties carry a high risk of diversion. This creates a regulatory "Red Flag."
When a Red Flag is present, you have a duty to inquire. You cannot "self-blind" or ignore the relationship. You must conduct enhanced due diligence to verify the end-user and end-use.
Due Diligence Requirement
If an affiliate relationship exists, obtain a written End-User Statement certifying that the items will not be re-transferred to the restricted parent. If you cannot verify this, do not ship.
Automating Affiliate Detection
Manual KYC searches on Google are insufficient for modern compliance. You need automated tools that map corporate hierarchies.
SecurePoint USA's ownership graph technology automatically detects:
Parent/child relationships and percentage ownership stakes.
Direct links between your customer and any restricted entity.
Check Your Exposure
Use our free calculator to map your customer's ownership structure against the 50% threshold and see where red flags sit today.
Run BIS 50% CalculatorFrequently Asked Questions
Does a 25% ownership stake trigger a block?▼
No. And while the Affiliates Rule is suspended, no ownership percentage triggers an automatic EAR block on an unlisted affiliate — the 50% threshold is scheduled to become operative on November 10, 2026. A significant minority stake is still a "Red Flag" that requires enhanced due diligence to ensure the restricted owner isn't controlling the entity. Note that OFAC's separate 50% Rule does block at 50% today.
What if the affiliate is in a different country?▼
US export controls are extraterritorial, so the location of an affiliate does not exempt it. Once the Affiliates Rule takes effect on November 10, 2026, ownership by an Entity List party will extend the restrictions regardless of geography. Today the "acting on behalf of" standard already reaches a foreign affiliate that procures for a listed party.