BIS Affiliates Rule Suspension Extended but Uncertainty Remains
Last year in November 2025, as part of the broader U.S.-China Busan Agreement, the Affiliates Rule was provided a one-year suspension without modification of the underlying rule. Absent action by the U.S. government, the Affiliates Rule is set to resume on November 10, 2026. Resumption of the Affiliates Rule by the U.S. Bureau of Industry and Security (BIS) means significantly broader screening and due diligence obligations for companies, including the need to look beyond whether a customer, supplier, or other transaction party appears on a restricted-party list by examining who owns that business entity.
Adding complexity, this year, on September 23, 2026, Treasury Secretary Scott Bessent announced that the United States and China had agreed to extend the Busan Agreement for two months through January 10, 2027. The truce is expected to result in a corresponding extension of the suspension of the Affiliates Rule through January 10, 2027. As of the date of this writing, however, BIS has not published a Federal Register notice formally changing that effective date, and there has been no explicit confirmation by the U.S. government that the two month extension will apply to the Affiliates Rule.
As a result, companies are left to assume that the Affiliates Rule will be suspended, but uncertainty remains as to when and for how long. Accordingly, companies operating subject to the U.S. Export Administration Regulations (EAR) should continue to proceed with caution on the assumption that the Affiliates Rule may be reinstated and use the remaining time to assess whether their screening and due diligence procedures are prepared for its return.
Background
As discussed in our previous alert (see our previous alert BIS Expands Export Controls with New Affiliates Rule), on September 29, 2025, BIS issued a pivotal and sweeping interim final rule under the EAR significantly broadening the scope of end-user-based export controls (see link to Affiliates Rule). Then on November 1, 2025, the White House issued a Fact Sheet announcing a one-year suspension of the “Affiliates Rule” effective November 10, 2025 (see our previous alert White House Suspends BIS Affiliates Rule for One Year).
To refresh, the Affiliates Rule expanded existing export control restrictions to cover export, reexport, and transfer (in-country) of items subject to the EAR involving any entity that is 50% or more owned, directly or indirectly, individually or in aggregate, by one or more parties designated on the: (i) Entity List, (ii) Military End-User List (MEU List), or (iii) Specially Designated Nationals and Blocked Persons designated under programs listed in EAR Part §744.8 (SDN List).
The Affiliates Rule added significant screening obligations and adopted a “most restrictive” approach (see link to FAQs). When a company has “knowledge” that a transaction party may be owned by an Entity List, MEU List, or SDN List party, BIS expects the company to determine the relevant ownership percentages. If ownership cannot be determined, BIS guidance indicates that the exporter may need to seek a license before proceeding unless a license exception is available. When multiple listed entities collectively own 50% or more of a foreign entity, the affiliate becomes subject to the most restrictive licensing requirements, licensing policy, and license exception eligibility applicable to any of its listed owners.
Recommended Actions
Companies may continue to use the suspension period to reassess internal compliance protocols and review existing counterparty relationships, pending transactions, and export activities to confirm alignment with the new regulatory expectations. With looming uncertainty, companies may continue to take the following steps:
- Evaluate screening capabilities. Determine whether internal compliance systems and third-party screening vendors can identify ownership-based affiliate relationships rather than solely screening named parties.
- Map high-risk counterparties. Review customers, distributors, suppliers, joint-venture partners, and other business relationships that may have ties to Entity List, MEU List, or SDN List parties.
- Enhance ownership due diligence. Update onboarding, contracting, and periodic review procedures to capture information regarding ownership, control, parent companies, and affiliate relationships.
- Revise certifications and questionnaires. Consider requesting additional ownership and control information from customers, distributors, and other counterparties.
- Review pending transactions. Identify transactions that may require additional diligence, licensing analysis, or restructuring if the Affiliates Rule becomes effective.
- Train relevant personnel. Ensure that compliance, sales, logistics, procurement, and management personnel understand the Affiliates Rule’s ownership-based requirements and related red flags.
Looking Ahead
Based upon the comments of Treasury Secretary Scott Bessent, companies may generally assume that by agreeing to extend the Busan Agreement, the United States and China have agreed to extend the Affiliates Rule through January 10, 2027. For this to occur, however, the BIS will still need to take steps to publish a formal Federal Register notice announcing the repeal, modification, extension, or suspension of the Affiliates Rule.
With uncertainty continuing to loom, companies may take this opportunity to assess screening capabilities, strengthen ownership-based due diligence procedures, and identify transactions that could be affected by the Affiliates Rule’s reimposition. Companies that prepare will be better positioned to minimize business disruption, avoid unexpected licensing requirements, and reduce potential exposure to BIS enforcement actions should the Affiliates Rule be reinstated.
If you have questions regarding the Affiliates Rule, export compliance obligations, ownership-based due diligence requirements, or the potential impact on your business operations and supply chain, please contact the authors of this alert or your Miller Canfield attorney.
