Since May 2025, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) has been preparing to implement a so-called “50% Rule” to close gaps in export control enforcement. While details of the new rule have yet to be released publicly, it might automatically expand existing export restrictions targeting over 3,000 entities on the BIS’ Entity List and Military End User list to any company that is ultimately 50% or more owned by those targeted entities, even if that subsidiary is not explicitly listed.

This mirrors the approach taken by the Office of Foreign Assets Control (the Treasury Department’s sanctions arm) since 2008 and will have a profound effect on companies active in international trade, supply chain management, or “dual use” technologies considered sensitive by the U.S. government.

Why It Matters

• New Scale of Export Controls: The new rule could instantly apply export restrictions to potentially tens of thousands of subsidiaries of the existing designated entities, with the onus on exporters to determine whether their business partners are suddenly under export restrictions.
• Hidden Ownership Risks: Companies whose business partners use complex ownership structures routed through opaque jurisdictions and shell companies may unknowingly transact with a restricted entity.
• Global Impact: While existing U.S. export control rules largely target China and Russia, the 50% Rule would immediately create new high risk jurisdictions for exporters active in regions with active commercial ties to those countries, including Southeast and Central Asia.
• Regulatory Uncertainty: While media reports and industry observers have guessed at the outlines of the new rule, details remain scarce and the scope of the new restrictions could vary significantly based on the outcome of U.S.-China trade negotiations.

How Gryphon Helps Mitigate the Risk

At Gryphon, we specialize in getting behind the ownership chart and uncovering what lies beneath the surface:

• Beneficial Ownership Investigations: We trace complex corporate structures through multiple jurisdictions to identify ultimate beneficial parties.
• Entity List & Sanctions Link Analysis: Our team cross-references counterparties and beneficial owners against BIS, OFAC, and other global watchlists.
• Global on-the-Ground Due Diligence: Where paper records stop, our investigators go further. We source corporate filings, archived press reports, litigation records, and local intelligence to reveal hidden connections.
• Risk Assessment & Monitoring: We provide clients with ongoing monitoring solutions, so if ownership changes or a sanctioned shareholder gains control, you know right away.

Implementation of a 50% Rule for BIS-designated entities would represent a fundamental shift in how global companies must think about ownership risk. Companies would no longer be able to rely on existing designated entity lists, and will instead need deep-dive due diligence to understand who is really behind their counterparties, vendors, and joint ventures.

Gryphon helps clients see what others miss, giving boards, compliance teams, and legal departments the clarity needed to operate globally with confidence.