Core Viewpoint - The BIS's "50% Rule" significantly alters export control compliance by expanding the scope to include foreign affiliates that are 50% or more owned by listed entities, creating new challenges for corporate compliance teams [1][2][15]. Group 1: Key Changes in Regulation - The new rule shifts from a "list management" approach to a "shareholding penetration" standard, meaning any foreign entity with 50% or more ownership by listed entities will face the same restrictions, regardless of whether the entity itself is listed [2][3]. - The rule introduces a "strict liability" framework, where companies may be held accountable for unauthorized transactions with restricted entities, even if they were unaware of the relationship [3][4]. Group 2: Compliance Challenges - Companies must now conduct thorough due diligence to identify if a transaction partner is controlled by a listed entity, as the compliance burden has increased significantly [3][5]. - The "Red Flag 29" provision mandates that once a company is aware of a listed entity as a shareholder, it has an active obligation to ascertain the ownership percentage, or else it must apply for a license [3][6]. Group 3: Tools and Solutions - World-Check has updated its database to comply with the 50% ownership standard, ensuring that all subsidiaries and affiliates owned over 50% by listed entities are accurately recorded [5][8]. - The system offers automated ownership penetration analysis to quickly identify affected entities, reducing manual screening costs and time [8][10]. - It integrates multiple lists (Entity List, MEU List, and OFAC SDN lists) to streamline compliance checks, allowing companies to identify potential risks without switching between different databases [7][10]. Group 4: Practical Applications - The system can visualize ownership structures, helping compliance teams understand complex relationships between listed entities and target companies [10][11]. - A case study illustrates how a company with multiple listed shareholders can be automatically classified as restricted under the new rule, highlighting the importance of comprehensive screening [13]. Group 5: Conclusion - The BIS's 50% rule fundamentally changes the compliance landscape, necessitating advanced tools like World-Check to meet regulatory requirements and manage risks effectively [15].