Publication date: March 16, 2026
The U.S. Bureau of Industry and Security (BIS) has introduced a new regulation called the 50% Rule, requiring every exporter to verify the ownership of parties to a transaction before shipping products. Previous name verification is no longer sufficient. BIS has expanded its end-user screening regulations to an unprecedented range of (and opaque) product and business relationship categories. If at least 50% of a company’s shares are owned by one or more entities on the BIS List or the Military End-User List (MEU), the company is automatically subject to the same restrictions as the owner. The BIS Entity List includes individuals, businesses, government organizations, and addresses subject to specific licensing requirements for the export, re-export, and transfer of goods within a given country. Previously, entities legally distinct from those on the list were not subject to licensing requirements, and the current expanded list includes thousands of subsidiaries, parent companies, and sister companies. This rule is intended to prevent situations where companies affiliated with sanctioned entities continue to operate freely because they are not named. This regulation is intended to fill a significant gap in the restricted entity lists and strengthen the overall control system in the United States. Furthermore, the introduction of this regulation significantly expands the licensing requirement; a recipient not listed on any of the above lists may still be subject to an export ban. Furthermore, if a company fails to verify the ownership of its contractors, it risks sanctions and loss of export privileges. Current tools are no longer sufficient, and an analysis of the ownership structure has become necessary. This regulation is similar to the 50% Rule of the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC). BIS also introduced a new “red flag”: if there’s uncertainty about a potential counterparty’s ownership structure, the transaction cannot proceed without additional verification or licensing. This requires firms to obtain ownership information, document their arrangements, and halt the transaction if there’s a lack of transparency.
There are companies and analytic firms that help various businesses and institutions identify connections between entities to prevent business risks or other regulatory violations. They enable clients to uncover hidden connections between entities and meet stringent regulatory accountability standards. They verify compliance with the BIS SO rule, thus including the same comprehensive data on ownership, methodology, and shareholder percentages. By leveraging corporate data from around the world, this model protects against potential regulatory risk and also provides immediate reach, flexible integration, and a proven methodology. It also checks entities against sanctions lists imposed by the United States, European Union countries or the United Kingdom, automatically marking those subject to sanctions and companies associated with them.
The process that takes place thanks to the solutions used by can be described in 4 stages:
– Collecting billions of documents from multiple databases (various types of company registers, customs and trade registers)
– Data analysis by the system, identification of names and combining information about the same people or companies
– Building graphical maps of relationships between entities, showing their connections: financial, ownership or transactional
– Detection of potential risks by the system: connections with sanctioned companies, money laundering risks, corruption, hidden ownership links and conflicts of interest.
In this way, there is possible rapid detection of complex and hidden connections between different business entities and risks, based on the largest databases commercially available.
In addition to using the above solutions, there are provided recommendations to clients, which can be defined in the following few steps:
– building a complete picture of the ownership of all trading partners
– identification of connections with sanctions lists
– aggregating the shares of individual owners to calculate the overall percentage
– verification if any of the owners have strict restrictions, then they will apply
– carrying out documentation of the entire process
– mapping: all entities
– updating various types of compliance systems
– implementation of tools for analyzing the ownership structure.
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