In the world of international trade, sanctions, and export control, rules change rapidly. A good example is the Affiliates Rule of the US Bureau of Industry and Security (BIS). This rule was intended to close a loophole: situations in which sanctioned parties still gained access to US technology or goods through foreign subsidiaries.
However, on October 30, US Treasury Secretary Scott Bessent announced that the US Department of Commerce, Bureau of Industry and Security (BIS) would delay the implementation of the Affiliates Rule by one year. This decision followed discussions between President Trump and Chinese President Xi Jinping as part of a broader agreement whereby China temporarily suspended its export licensing system for rare earth metals.
In short: implementation has been put on hold politically, but the direction remains clear.
What does the Affiliates Rule entail?
The rule stipulates that:
- Any foreign entity that is at least 50% owned by one or more parties on the Entity List, the Military End-User List, or other US sanctions lists (such as Specially Designated Nationals) will be subject to the same export and re-export restrictions as the parent entity.
- The restriction also applies when several sanctioned shareholders jointly reach the 50% threshold.
- Objective: To prevent sanctioned companies from gaining access to US technology or products through foreign affiliates.
In short: If you are at least half-owned by a sanctioned party, the same export rules apply, even if you yourself are not on a list.
What does the delay mean?
The announcement on October 30 gives companies some temporary breathing space. The postponement gives BIS time to refine the feasibility and gives companies the opportunity to better map out their ownership structures.
The message from Washington is clear: the US wants greater insight into who is really behind international corporate structures, especially when it comes to sensitive technologies and raw materials.
What should companies do now?
The Affiliates Rule, even with its postponement, makes one thing clear: compliance does not stop with your immediate business partner.
Businesses should be aware of the following:
- Who are the ultimate beneficial owners (UBOs) of their suppliers and customers?
- Are there any indirect links to entities on sanctions lists?
- Is the 50% ownership threshold exceeded by the combined interests of multiple sanctioned parties?
Without full insight into ownership structures, you may unknowingly trade with parties that are subject to export or sanctions rules, resulting in significant legal and reputational risks.
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How Altares Dun & Bradstreet helps
We help organizations to make this complexity transparent. Our solutions offer:
- Complete insight into ownership and group structures. Who are the parent, subsidiary, and sister companies?
- Identification of UBOs and interested parties, including through multiple layers or international holding companies.
- Automatic screening for sanctions lists, PEPs, and risk factors.
- Real-time monitoring of changes in ownership structures or risk profiles.
- Audit trails for compliance and accountability to regulators.
This allows us to map not only names, but also the underlying control and ownership relationships that are relevant to export and sanctions regulations. View our compliance solutions here.
Looking ahead
The temporary suspension of the Affiliates Rule is no reason to sit still; rather, it is an opportunity to prepare. The trend is clear: international regulations are shifting from name-based screening to structure-oriented compliance.
Organizations that invest in transparency now will be in a stronger position when the rule comes back into force.
The suspension of the Affiliates Rule shows how closely politics, trade, and compliance are intertwined. While Washington and Beijing negotiate strategic raw materials, companies worldwide are faced with the need to have complete transparency regarding their ownership structures. With Altares Dun & Bradstreet, you have the tools and data to achieve that transparency, mitigate risks, and remain compliant, whatever the geopolitical winds may blow.
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