Nixon Peabody partner Christopher Grigg and counsel David Crosby will be presenting “BIS Affiliates Rule: Navigating the New 50% Ownership Standard” at the Massachusetts Export Center.
From the event website:
The long-anticipated BIS Affiliates/50% Rule, announced in late September, represents a substantial expansion of U.S. export control obligations by extending the Entity List, MEU List, and certain SDN restrictions to unlisted foreign entities that are 50% or more owned—directly or indirectly, individually or in aggregate—by listed parties. The rule is modeled after OFAC’s 50% Rule but is significantly broader. For example, unlike OFAC’s 50% Rule, the Affiliates Rule aggregates ownership across multiple restricted parties lists and applies the most restrictive controls governing a listed owner to the unlisted affiliate. In cases of ownership by multiple listed entities, BIS will apply the same most-restrictive approach to license exceptions, further limiting their availability.
The new rule’s impacts are far-reaching and exporters must adapt to avoid potential violations and penalties. Most importantly, the rule now obligates exporters to conduct deeper ownership due diligence on customers, distributors, and other transaction parties to identify covered affiliates. Moreover, exporters, re-exporters, and transferors (in-country) who have reason to believe a listed entity owns a portion of the consignee or intermediary but are unable to determine the ownership percentage must apply for a license and explain the due diligence steps taken and why they were unable to determine percentage ownership. When reviewing license applications, BIS will use this additional information to evaluate potential diversion concerns.
This webinar will provide an overview of BIS’ Affiliates Rule and its compliance implications. Topics will include aggregating ownership across the Entity List, MEU List and SDN List and assessing unlisted owners caught by this regulation. Our speakers will also discuss practical strategies for conducting robust ownership due diligence to mitigate compliance risks. Join us for this timely program to gain practical insights into complying with this new regulation. Bring your questions!