BIS Adds 26 to Entity List for Supplying Iran

The Bureau of Industry and Security is adding 26 entities to the Entity List for illegally supplying aircraft parts, drone components, electronic items and other products to Iran, and the agency is adding three addresses to the list for links to an Iranian procurement network. Nineteen of the new entries are based in China, nine are in Turkey and one is in the United Arab Emirates, BIS said in a final rule released and effective Oct. 8. They will be subject to license requirements for all items subject to the Export Administration Regulations, and licenses will be reviewed under a presumption of denial.

BIS Officially Releases 50% Rule for Entity List, MEU List

The Bureau of Industry and Security officially released a new regulation to introduce a 50% ownership threshold rule for parties on the Entity List and Military End-User List. The interim final rule, released and effective Sept. 29, will impose the same export license requirements as the parent company for any affiliate owned 50% or more by a party on the Entity List or Military End User List, similar to how sanctions are applied under the Office of Foreign Asset Control's 50% rule. The rule includes a 60-day temporary general license that “permits certain export, reexport, and transfer (in-country) transactions involving non-listed 50-percent or more owned foreign affiliates of parties on the Entity List or Military End-User List.” BIS is accepting public comments on the changes by Oct. 30.

BIS Draft Rule Would Apply 50% Rule to Entity List, MEU List; Includes TGL

The Bureau of Industry and Security has drafted and is preparing to soon publish an interim final rule that will introduce a 50% rule for parties on the Entity List and Military End-User List, according to a copy of the rule seen by Export Compliance Daily. The rule would impose the same export license requirements as the parent company for any affiliate owned 50% or more by an entity on those two lists, and it includes a 60-day temporary general license to authorize certain transactions with some non-listed entities before the new restrictions apply.

The rule is expected to take effect on publication in the Federal Register, and could be issued as soon as this week.

A BIS spokesperson didn’t immediately respond to request for comment.

The text of the draft rule, which hasn’t yet been released and hasn’t been previously reported, says if exporters can’t determine the ownership percentage of a foreign entity owned by a party on the Entity List or MEU List, the exporter must resolve that “red flag” or obtain a BIS license before moving forward with the export, reexport or transfer, unless a license exception is available. If a non-listed foreign entity is owned 50% by more than one party on those lists, “the most restrictive of those Entity Lists license requirements apply,” BIS said.

If, after receiving a license application, BIS is able to determine that the foreign entity is not owned 50% or more by a listed party, BIS said it will return the license to the applicant “without action” and inform the applicant that a license isn’t required. “In such cases BIS may consider issuing guidance, as appropriate, in the form of a frequently asked question on the BIS website to advise other exporters of such determination,” the rule says.

The rule also said affiliates of listed parties can ask BIS to be exempted from the 50% rule restrictions. In those cases, BIS said it may modify a listing to "exclude" certain affiliates.

The rule says BIS is mirroring the approach of the 50% rule used by the Office of Foreign Assets Control. “Adopting the same standard that exporters, reexporters and transferors have already been using in their OFAC compliance programs will likely ease the burden in adopting the new standard for Entity List compliance as compared with a distinct standard that applies a lower ownership threshold,” BIS said.

But the agency also acknowledged that the new rule, which it calls the “Affiliates Rule,” may “require additional analysis” and compliance resources by the private sector. “Applying the Affiliates rule may take more time and compliance resources compared to simply screening a list for identified names, especially in situations where limited information on corporate ownership structures is publicly available, such as where a listed entity is privately held,” the rule says.

The agency also said it’s “concerned” that its current approach to the Entity List “can enable diversionary schemes, such as the creation of new foreign companies to evade Entity List restrictions. Creations of such companies may allow listed entities to deceive exporters, reexporters, and transferors into the provision of items in violation of the Entity List restrictions that apply to the listed entities.”

The agency added that its “old approach” required it to “expend substantial efforts to address the tactics that listed entities would adopt to circumvent their placement” on the Entity List, such as creating front companies under different names. “Because of such diversion concerns, BIS has determined that to protect U.S. national security and foreign policy interests, the Entity List restrictions should also extend to certain foreign companies that are subsidiaries or other foreign affiliates owned by listed entities.”

The rule also includes compliance guidance and several example scenarios to show how the rule might apply.

BIS Adds 32 to Entity List, Mostly in China

The Bureau of Industry and Security is adding 32 entities to the Entity List for either circumventing export controls on China, supplying controlled items to Russia, evading BIS end-use checks or other activities that BIS said breached U.S. export rules. The additions include 23 entities located in China, along with others based in India, Singapore, Taiwan, Turkey and the United Arab Emirates, the agency said in a final rule released and effective Sept. 12. They will be subject to license requirements for all items subject to the Export Administration Regulations, and licenses will be reviewed under a presumption of denial or policy of denial.

The rule also revises existing Entity List entries to remove addresses or correct “typographical errors.”

BIS to Revoke VEU Status for China Facilities Owned by Samsung, SK Hynix

The Bureau of Industry and Security is removing Samsung China Semiconductor Co., SK hynix Semiconductor (China) and a third SK hynix-owned semiconductor facility in Dalian from the agency’s Validated End-User List, which will make them ineligible for a general authorization that had allowed them to receive certain U.S.-controlled technology. BIS called the VEU program a “loophole” because it allows certain foreign firms to export chip manufacturing equipment and technology to China without a specific license. The final rule takes effect Dec. 31.

BIS said it plans to approve export license applications to allow former VEU participants to operate their existing fabs in China, but it “does not intend to grant licenses to expand capacity or upgrade technology at fabs in China.”

The agency’s Federal Register notice, released Aug. 29, said one of the factories being removed from the VEU List is Intel Semiconductor (Dalian). SK hynix bought that factory from Intel earlier this year, according to Intel’s March SEC filing. BIS didn’t immediately respond to a request for comment about whether it plans to issue a clarification.

BIS to Relax Syria Export Controls Sept. 2

The Bureau of Industry and Security released a final rule Aug. 28 that will ease export controls on Syria by making the country eligible for more license exceptions and revising current BIS license review policies for Syria to “be more favorable.” The rule, effective Sept. 2, will also create a new License Exception Syria Peace and Prosperity, which will authorize exports and reexports to Syria of items designated under the Export Administration Regulations as EAR99.

US Chip Design Firm Cadence Fined, Pleads Guilty to Export Violations

Cadence, a California-based electronic design automation firm, will pay more than $140 million in combined civil fines, criminal penalties and forfeitures to resolve allegations that it illegally exported technology to Chinese entities, DOJ and the Bureau of Industry and Security announced July 28. The company pleaded guilty to illegally exporting EDA hardware, software and semiconductor design intellectual property technology to the National University of Defense Technology, a university added to the Commerce Department's Entity List for its ties to the Chinese military, DOJ said.

The penalty includes a $95 million civil fine by BIS, with half of that fine credited to the amount Cadence owes DOJ. BIS said Cadence committed 61 violations of the Export Administration Regulations and admitted that employees of its Chinese subsidiary knowingly transferred sensitive U.S. technology to entities that develop supercomputers for China's military and nuclear weapons programs, including the National University of Defense Technology, Tianjin Phytium Information Technology and other companies on the Entity List. Cadence also agreed to complete two audits of its export compliance program.

BIS Announces Plans to Replace AI Diffusion Rule, Issue New Chip Guidance

The Bureau of Industry and Security officially announced May 13 that it plans to rescind the Biden administration’s AI diffusion export control rule and issue a “replacement rule in the future.” BIS enforcement officials won't be enforcing the Biden-era rule, the agency said, which was scheduled to take effect May 15. The agency said it plans to publish a formal rescission notice in the Federal Register.

BIS also said it plans to issue new guidance to clarify that using Huawei Ascend chips “anywhere in the world violates U.S. export controls” and to warn people and companies about the possible penalties they could face if they allow U.S. AI chips to be used for "training and interference of Chinese AI models." Additional guidance will instruct U.S. companies on how to protect supply chains against diversion tactics, the agency said.

BIS Adds 18 Entities to Unverified List, Removes 5

The Bureau of Industry and Security said April 24 that it added 18 entities to its Unverified List after it was unable to verify the “legitimacy and reliability” of the parties through end-use checks, including their ability to responsibly receive controlled U.S. exports. It also removed five companies from the list. The added entities are located in China, Finland, Italy, Kazakhstan, Turkey and the U.K., while the removed ones are in China and the United Arab Emirates.

BIS Adds 82 Entities to Entity List

The Bureau of Industry and Security is adding 82 entities, mostly in China, to the Entity List, it said in two final rules released March 25. One notice, effective March 25, adds 11 mainland China-based companies and one Taiwanese company for trying to illegally buy export-controlled items for the country’s military or for having other ties to Chinese military end users. Another notice, effective March 28, will add 42 entities in China, 19 in Pakistan, four in the United Arab Emirates, three in South Africa and two in Iran for a range of reasons that are “contrary to the national security and foreign policy” of the U.S., including some for contributing to China’s quantum technology capabilities.

The entities will face license requirements for all items subject to the Export Administration Regulations, and licenses will be reviewed under either a presumption of denial or policy of denial. Some of the entities will also face additional foreign direct product rule restrictions.

BIS Issues New Chip Rule, Biotech Controls; Adds to Entity List

The Bureau of Industry and Security released four new rules Jan. 15, including one that will make more changes to its semiconductor-related export controls -- including by creating a new list of trusted chip designers and service providers -- another rule that will place new controls on certain biotechnology equipment and technology, and two rules that will add companies to the Entity List.

One interim final rule, which has an effective date of Jan. 16 and a compliance date of Jan. 31, will impose a broader license requirement for chip foundries and packaging companies exporting certain advanced chips, unless those exports are destined to a list of trusted chip designers, chip assembly and test services firms, or other companies outside of U.S.-embargoed countries that meet certain conditions. BIS also said the rule sets out "additional due diligence procedures" for exporters of advanced chips, introduces new reporting requirements for certain higher-risk customers and makes other changes, clarifications and updates to BIS export controls for advanced semiconductors and related items, including its latest controls on advanced AI chips released Jan. 13.

Another interim final rule will introduce new export controls for certain biotechnology-related items, including “high parameter flow cytometers” and “liquid chromatography mass spectrometers specially designed for top-down proteomics.” BIS said this equipment can be used for “innovative solutions” in the fields of health and climate change, but they can also be “misused by countries of concern,” including through training AI systems for military purposes. The controls take effect Jan. 16.

BIS will also add 27 entries to the Entity List for helping China make or procure advanced semiconductors or for supporting China’s military modernization efforts through AI research, the agency said in a pair of notices effective Jan. 16. The entities are located in China and Singapore, and they will be subject to license requirements for all items subject to the Export Administration Regulations, and licenses will be reviewed under a presumption of denial. Some will be subject to certain foreign direct product rule restrictions.

BIS Issues New Global AI Chip Export Controls, Exceptions

A new Bureau of Industry and Security rule released Jan. 13 will place new, worldwide export controls on advanced computing chips and certain closed artificial intelligence model weights, capping the number of AI chips that can be sent to most countries while introducing an exception for a group of allies that the Biden administration said already have strong AI technology protection rules. The 168-page interim final rule also creates new license exceptions for certain supply chain activities and low-volume shipments of powerful chips -- except for China, Russia and other U.S.-embargoed countries -- and updates the agency’s validated end-user program (VEU) to lift certain licensing requirements for certain data centers that meet stringent new security conditions.

License applications will be reviewed under a presumption of approval until the total quantity of controlled chips exported to that country exceeds the specified cap outlined in the rule, BIS said. After a country reaches that cap, applications will be reviewed under a policy of denial. A presumption of denial remains in place for arms-embargoed countries, regardless of quantity.

The rule takes effect Jan. 13, although exporters and others won’t need to comply with most changes until May 15 and portions of the new VEU-related security requirements until Jan. 15, 2026. Public comments are due May 15.

US Announces Expanded Russian Energy Sanctions

The U.S. on Jan. 10 announced a new set of sanctions against Russia’s energy sector, targeting major Russian oil producers, oil service providers and insurance companies, as well as vessels and traders moving Russian oil as part of the country’s shadow fleet. Treasury said the designations target two of Russia’s “most significant” oil producers and exporters -- Gazprom Neft and Surgutneftegas -- along with more than 180 other people, ships and traders involved in Russian oil trade.

The Treasury Department also issued two new determinations that authorize sanctions against any person or entity with ties to Russia’s energy sector and that block the provision of U.S. petroleum services to parties in Russia. New general licenses authorize certain transactions with the designated companies and vessels.

BIS Adding 13 to Entity List for Aiding China's Military, Pakistan's Weapons Program

The Bureau of Industry and Security on Jan. 6 will add 13 companies to the Entity List for illegally shipping export-controlled items in support of China’s military modernization efforts or Pakistan’s ballistic missile program. The entities are located in Myanmar, China and Pakistan, the agency said in a final rule released Jan. 3. They will be subject to license requirements for all items subject to the Export Administration Regulations, and licenses will be reviewed under a presumption of denial.