Data Shows BIS 50% Rule Impact by Country
Nearly 21,000 companies could be affected by new export license requirements if the Bureau of Industry and Security reinstates its 50% rule, also known as the Affiliates Rule, financial services company Moody's said this week.
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It estimated that more than 11,000 of those companies are in Russia, while nearly 4,000 are based in China and 600 in Iran. Cyprus would be the most affected European country, according to Moody's, which said the country houses about 275 affiliates that could be affected. Most of those Cypriot entities' ultimate beneficial owners are legally based in Russia, it said.
The Moody's data included a breakdown of how many entities in each country could be affected by the 50% rule, which is expected to expand the universe of companies that are subject to stringent BIS license requirements by making any majority-owned affiliate subject to the same export restrictions as their owner on either the Entity List, Military End-User List or under certain financial sanctions (see 2509290017 and 2510030041). BIS announced the rule earlier this year before suspending it for one year in November as part of a trade agreement with China (see 2510310020, 2511100017 and 2510300024).
The Moody's data also outlined what the company said would be the "most exposed industries" under the 50% rule, led by "wholesale of information and communication equipment"; "other monetary intermediation"; "business and other management consultancy activities"; "wholesale of solid, liquid and gaseous fuels and related products"; and "engineering activities and related technical consultancy."
It also described the largest companies, by annual revenue, that could be affected, led by Iranian petrochemical companies, Chinese "electric appliances" businesses, Netherlands-based satellite telecommunication firms and Russian crude petroleum extraction companies. "All companies are large-scale, asset-heavy, and strategically important, making them prime candidates for BIS coverage under ownership/control rules," Moody's said.
Open-source intelligence software firm WireScreen previously said it identified more than 20,000 Chinese entities alone that became subject to U.S. export restrictions as a result of the Affiliates Rule, before it was suspended by BIS (see 2510210013).