By late 2023, scrutiny was increasing around a long-recognized export controls gap. The U.S. Department of Commerce’s Bureau of Industry and Security (BIS) Entity List restricts parties named on it, and the military end-use/end-user (MEU) rule only applies to entities that meet certain criteria, but neither automatically extends restrictions to subsidiaries or affiliates based solely on ownership. This gap raised concerns that restricted parties could acquire certain U.S. products via their related parties.
BIS guidance already treated opaque ownership and other ties to restricted parties as red flags requiring due diligence. The difference was in legal effect: those relationships did not, by ownership alone, automatically subject a separately incorporated affiliate to the listed party's restrictions. Under the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) 50 Percent Rule, by contrast, an entity owned 50% or more by blocked persons is itself considered blocked even if it is not separately named.
In December 2023, the bipartisan U.S. House Select Committee on the Chinese Communist Party called for closing the so-called “subsidiary loophole” and expanding export license requirements to subsidiaries of foreign adversary companies on the Entity List. What BIS would ultimately do remained uncertain: which restricted party lists an ownership-based rule might reach, and how ownership itself would be defined, were open questions.
The firm made a strategic, risk-based decision to avoid certain engagements with Entity List parties and, when the Affiliates Rule took effect, extended that approach to those parties’ subsidiaries. Its screening program sought to cover all external interactions with prospective and current clients at every level of business, which it turned to Kharon to achieve.
In January 2024, the firm approached Kharon about expanding its existing relationship to include data on entities that may be owned 50% or more by parties on the BIS Entity List. Early visibility into those ownership relationships would help it assess external engagements against its own risk policy as the regulatory framework evolved. Only Kharon could deliver the comprehensive, focused data the firm required.
Its relationship with Kharon had begun with Kharon ClearView, a platform for investigating and visualizing networks around sanctioned and other high-risk actors, and Kharon’s Sanctions 50-Plus dataset, delivered through Kharon GraphCast, which gave the firm a window into entities captured through sanctions ownership thresholds.
The expanded use case flowed organically from existing controls: the firm already used Kharon sanctioned ownership data in its screening program and could incorporate BIS-related ownership data into the same platform.
Over the following months, the firm moved forward with the additional data, with integration into its existing screening platform activating in August 2024.
The firm continued using Kharon’s ownership data after the final rule took effect, now delivered as Kharon’s BIS 50-Plus dataset. The dataset includes entities that may be owned 50% or more in the aggregate by parties on the BIS Entity List, restricted MEUs, or parties sanctioned under the specific OFAC programs the rule targets.
That data reflects Kharon's research into direct, indirect, and aggregate ownership stakes and is updated as government lists are revised and as structures shift. Kharon’s methodology combines AI-augmented data collection at scale with expert-led, multilingual investigations into company disclosures, local and social media, and other complex sources that automated aggregation and scraping cannot reach on their own, all of which is quality-assured before publication.
The firm has continued using Kharon’s BIS 50-Plus dataset during the suspension, maintaining the ownership visibility it first incorporated into its screening program in August 2024, well before BIS issued the rule.
That continued use reinforces the original rationale for moving early: knowing which companies are owned by BIS-listed parties and covered sanctioned parties remained relevant to the firm’s risk appetite, with or without a rule in place.
BIS guidance already treated opaque ownership and other ties to restricted parties as red flags requiring due diligence. The difference was in legal effect: those relationships did not, by ownership alone, automatically subject a separately incorporated affiliate to the listed party's restrictions. Under the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) 50 Percent Rule, by contrast, an entity owned 50% or more by blocked persons is itself considered blocked even if it is not separately named.
In December 2023, the bipartisan U.S. House Select Committee on the Chinese Communist Party called for closing the so-called “subsidiary loophole” and expanding export license requirements to subsidiaries of foreign adversary companies on the Entity List. What BIS would ultimately do remained uncertain: which restricted party lists an ownership-based rule might reach, and how ownership itself would be defined, were open questions.
Why the firm moved before the rule existed
For one global consulting firm, the decision to obtain BIS-related ownership data was driven by reputational considerations. Despite not exporting controlled items, the firm considers relationships with Entity List parties detrimental to its brand and the long-term value of its business.The firm made a strategic, risk-based decision to avoid certain engagements with Entity List parties and, when the Affiliates Rule took effect, extended that approach to those parties’ subsidiaries. Its screening program sought to cover all external interactions with prospective and current clients at every level of business, which it turned to Kharon to achieve.
In January 2024, the firm approached Kharon about expanding its existing relationship to include data on entities that may be owned 50% or more by parties on the BIS Entity List. Early visibility into those ownership relationships would help it assess external engagements against its own risk policy as the regulatory framework evolved. Only Kharon could deliver the comprehensive, focused data the firm required.
Expanding the use of Kharon across the control framework
The request built on work the firm was already doing with Kharon to understand risk beyond names appearing directly on government lists.Its relationship with Kharon had begun with Kharon ClearView, a platform for investigating and visualizing networks around sanctioned and other high-risk actors, and Kharon’s Sanctions 50-Plus dataset, delivered through Kharon GraphCast, which gave the firm a window into entities captured through sanctions ownership thresholds.
The expanded use case flowed organically from existing controls: the firm already used Kharon sanctioned ownership data in its screening program and could incorporate BIS-related ownership data into the same platform.
Over the following months, the firm moved forward with the additional data, with integration into its existing screening platform activating in August 2024.
When the rule arrived, the firm was already prepared
On September 29, 2025, BIS issued the Affiliates Rule as an interim final rule, effective that day.
By then, the consulting firm had been receiving Kharon’s ownership data on BIS Entity List and Military End Users through its screening platform for more than a year. That data already showed the firm which companies were majority-owned by listed parties, even when BIS had not named them. So when the rule took effect, the firm was positioned to treat those affiliates the same way it treated listed parties.The firm continued using Kharon’s ownership data after the final rule took effect, now delivered as Kharon’s BIS 50-Plus dataset. The dataset includes entities that may be owned 50% or more in the aggregate by parties on the BIS Entity List, restricted MEUs, or parties sanctioned under the specific OFAC programs the rule targets.
That data reflects Kharon's research into direct, indirect, and aggregate ownership stakes and is updated as government lists are revised and as structures shift. Kharon’s methodology combines AI-augmented data collection at scale with expert-led, multilingual investigations into company disclosures, local and social media, and other complex sources that automated aggregation and scraping cannot reach on their own, all of which is quality-assured before publication.
Maintaining coverage through the rule’s suspension
BIS issued the rule in September 2025, then paused it. The pause was set to end November 9, 2026, and BIS has now extended it through January 10, 2027.The firm has continued using Kharon’s BIS 50-Plus dataset during the suspension, maintaining the ownership visibility it first incorporated into its screening program in August 2024, well before BIS issued the rule.
That continued use reinforces the original rationale for moving early: knowing which companies are owned by BIS-listed parties and covered sanctioned parties remained relevant to the firm’s risk appetite, with or without a rule in place.
