BIS 50% rule – what it means for cross border business
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.
