US export controls are entering a new phase. By November this year, companies exporting goods, software or technology subject to US regulations will face significantly expanded compliance obligations under new rules introduced by the Bureau of Industry and Security (BIS). At the center of these changes is the so-called "50 percent affiliates rule" – a shift that moves export controls beyond named entities and into ownership structures. It extends export restrictions to any company that is 50 percent or more owned, directly or indirectly, by a listed entity, even if that company does not appear on any restricted party list. This represents a shift from a name-based system to an ownership-based model, closing what regulators see as a major loophole where restricted parties could operate through subsidiaries or affiliates.
The number of entities subject to export controls could increase dramatically, potentially multiplying several times over, many of which will not appear on traditional screening lists. We’ve asked Ken Peters, President MIC US, about this and its consequences for companies.
What makes the BIS '50 percent affiliates rule' such a game-changer for export compliance?
Before this rule, BIS restrictions applied only to entities explicitly listed. Their subsidiaries and affiliates often sat in a legal gray zone, restricted only if named individually. That is changing now. Under the Affiliates Rule, any company owned 50% or more by a listed entity is automatically subject to the same restrictions, even if it never appears on any list.
Put simply: compliance is no longer about checking names, it’s about understanding ownership.
With restricted entities potentially growing to tens of thousands – how can companies realistically keep up?
They can’t — at least not manually. The Affiliates Rule doesn’t just expand the list. It effectively removes the idea of a complete list altogether. That makes traditional name screening insufficient.
What works instead is a layered approach:
- ownership-based screening
- continuous re-screening as structures change
- risk-based filtering to focus human review where it matters
This is no longer a list problem, it’s a data and automation problem.
How does MIC's DPS solution help companies identify hidden ownership structures that traditional screening would miss?
MIC DPS, backed by Orbis and D&B ownership data covering 200M+ companies, traverse upstream ownership chains automatically, apply configurable thresholds, and generate audit trails without human intervention. The companies that keep up won't be the ones with the largest compliance teams, they'll be the ones that recognize this as a data and automation problem.
Enforcement starts November 2026 – why should companies start preparing now and not later?
Because there’s no grace period. The rule is expected to snap back on November 10, 2026, and BIS enforcement follows a strict liability model. Being “mid-implementation” won’t help. And preparation takes time:
- gap assessments
- deploying UBO-capable screening deployment
- screening the full customer and vendor base
- cleaning up data
- updating contracts
- training staff
Most companies underestimate how long this takes. Those who start now have just enough time. Those who wait are taking a risk — and hoping for exceptions that won’t come.
What's the real risk for companies still relying on manual screening when this rule kicks in?
The risk is simple: missing what you cannot see. Manual screening focuses on names. But the Affiliates Rule is about ownership. Now it represents a significant compliance risk. When the rule returns, companies relying solely on Consolidated Screening List name-matching may unknowingly clear transactions involving restricted parties because they lack visibility into upstream ownership structures. This is not simply a process gap; it is a structural weakness, and BIS enforcement operates under a strict liability standard. A single missed affiliate relationship can result in penalties of up to $374,000 per violation, regardless of intent or good-faith efforts.
Compounding the challenge is Red Flag 29, which creates an affirmative obligation to investigate and document ownership relationships, while ownership structures themselves can change continuously after onboarding. The reality is clear: manual screening was designed for a compliance environment focused on matching names against static lists. The Affiliates Rule fundamentally changes that landscape beginning November 10, 2026.
