The global compliance landscape is shifting again. The U.S. Department of Commerce’s Bureau of Industry and Security (BIS) recently enacted an expanded “Affiliates Rule” — often referred to as the “50% Rule” — that could significantly reshape how financial institutions, exporters, and multinational businesses manage ownership risk.
While the rule technically sits under export controls, its implications stretch far beyond that — into the worlds of sanctions, financial crime compliance, and cross-border due diligence.
Why Compliance Teams Should Care:
The rule blurs the boundary between export control and sanctions compliance, mirroring OFAC’s ownership logic. For financial institutions, it means:
- More entities to screen, including subsidiaries not directly listed.
- Greater focus on beneficial ownership and indirect control.
- Higher operational complexity in sanctions, trade finance, and correspondent banking reviews.
Traditional list-based screening systems may miss such entities unless they incorporate ownership attribution logic — making this a wake-up call for compliance technology and data teams.
Key Actions for Compliance Leaders:
- Map ownership structures deeply — include indirect and joint holdings.
- Update screening rules — ensure aggregation logic reflects the 50% threshold.
- Monitor data quality — incomplete ownership data is now a red flag.
- Document rationale — transparency and explainability will be critical in audits.
The Bigger Picture:
The Affiliates Rule signals a shift from list-based to logic-based compliance — where understanding ownership, influence, and relationships matters more than static names.For compliance teams, it’s another step toward a risk-intelligence model — one that connects corporate structures, sanctions regimes, and data-driven monitoring into a single narrative of accountability.
Take Away:
The 50% Rule expands more than regulation — it expands responsibility.Modern compliance must now connect data, ownership, and intent to protect integrity across the financial system.