BIS “Affiliates Rule” Postponed for One Year

November 16, 2025 by 1 Comment

A month ago, we reported on the new BIS “Affiliates Rule” that extends a company’s sanctions to any subsidiary business that subject to 50% or more ownership by the sanctioned company. That rule became effective on September 29, 2025, but its implementation is already being postponed!

On November 12, BIS announced that it would be delaying the effective date of the Affiliates Rule for one year:

“This rule will be implemented in two phases. The first phase, effective on November 10, 2025, and ending November 9, 2026, is a one-year suspension of the Affiliates Rule. BIS is temporarily suspending all changes previously made to the EAR by the Affiliates Rule during this period. In the second phase of this final rule, effective November 10, 2026 and extending indefinitely, the changes included in the Affiliates Rule that are removed in the first stage will be added back into the EAR.”

Remember – OFAC policy still extend sanctions to 50%-owned subsidiaries of OFAC-sanctioned companies.

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BIS Applies Existing Sanctions to Partially-Owned Affiliates; TGB Aviation Added to Sanction List

October 8, 2025 by Leave a comment

NOTE: Implementation of this rule has been postponed by one year. For more details click here.

A new rule will apply Bureau of Industry and Security [“BIS”] sanctions to “affiliates,” and thus the sanctions will be expanded to include certain non-listed companies. This will create a de facto increased obligation for exporters to collect data and perform due diligence on export transactions.

As most of you know, State Department sanctions “flow-down,” meaning that if a company is sanctioned and it controls another company, the sanctions apply to the controlled company as well, even though the controlled company might not be listed as a sanctions-target.

The new BIS rules will apply a similar “flow-down” approach to any transaction that is subject to the jurisdiction of the BIS (which is most transactions in civil aircraft parts). If the potential partner is owned by a business or person that is restricted under Commerce or Treasury regulations, then the restrictions may “flow-down” to the potential partner. The rule is published in multiple parts, so here is a summary of the relevant parts:

  • If the parent entity is sanctioned under the BIS Entity List, and the parent entity owns 50% or more of the child business, then the child business is treated as if it were a BIS-sanctioned business as well (new language in 15 C.F.R. § 744.11(a)(1)).
  • If the parent entity is sanctioned as a military end user (“MEU”) under the BIS rules, and the parent entity owns 50% or more of the child business, then the child business is treated as if it were a BIS-sanctioned business as well (new language in 15 C.F.R. § 744.11(a)(1)).
  • If the parent entity is sanctioned as a Treasury Department Specially Designated National (SDN), and the parent entity owns 50% or more of the child business, then the child business is treated as if it were a BIS-sanctioned business as well (new language in 15 C.F.R. § 744.8(a)(2)).
  • For purposes of these rule, ownership will include direct or indirect ownership; if two or more restricted entities own 50% or more of a business, then their ownership will be aggregated for purposes of identifying whether the rule applies.
  • Generally these restrictions will not (yet) flow-down from the unlisted entities. Thus if an unlisted child entity is restricted by these rules, then its own 50%-owned subsidiaries (grandchildren) will typically not be affected by the restrictions until (1) the child-owner is listed or (2) the grandchild is listed.
  • The child business who is affected by these rules can request that it be specifically excluded from its parent listing. If this is successful, then parent entity’s listing (on the Entity List) would be modified to exclude the child business (new language in 15 C.F.R. §§ 744.16(e); 744.21(b)(2)).

This is an interim final rule, which means it became effective immediately, backdated to September 29, 2025. The government has opened comments on this interim final rule, through October 29, and if any reader sees ways to improve the rule, please let us know so that we can make sure your comments are received.

Compliance diligence remains important. We can see this from the latest addition to the Entity List. Tomorrow, the U.S. government plans to add TGB Aviation to the BIS sanctions list (it will be effective as of today). TGB Aviation is a parts distributor in Turkey and they are accused of shipping U.S.-origin aircraft components into Iran.

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More Changes: Permitting More Aircraft Parts to be Exported to Syria

August 28, 2025 by Leave a comment

Earlier this week we reported that the government was reducing the OFAC sanctions on Syria. At that time, we warned that the BIS sanctions programs remained in place.

The government is expected to reduce the BIS sanctions against Syria next week (probably Tuesday). This is expected to include an expansion of the license exceptions that are available for shipping goods to Syria. The license exception changes are expected to include an expansion of AVS (which is currently not applicable to Syria) that will allow AVS to be used for EAR99 goods and for goods only restricted under anti-terrorism restrictions (which will include aircraft parts controlled under ECCN 9A991.d, but will exclude things like IRUs).

The RPL license exception is also expected to become available for certain transactions with Syria (e.g. for repairing aircraft or their parts for Syrian airlines), provided that such exports will not support the Syrian police, military, or intelligence sensitive end users or uses.

There will still be restrictions on exports to Syria, so be sure to check compliance requirements carefully.

These changes are expected to be immediately effective upon publication.

UPDATE: The new rule was published September 2 and was consistent with our predictions

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Export Enforcement: BIS Emphasizes Self-Disclosure

October 16, 2024 by Leave a comment

In a recent change to the BIS rules, BIS has strongly emphasized the importance of self-disclosure by (1) making failure to self-disclose an aggravating factor in enforcement actions and (2) making it easier to self-disclose minor or technical violations.

The new rule was published as a direct-final rule without a Notice of Proposed Rulemaking.

Aircraft parts distributors who are exporting parts will want to seriously consider reporting both technical violations and significant violations in order to protect the company.

Penalty for Failure to make a Self-Disclosure

BIS has modified 15 C.F.R. § 764.5 to state that the government will consider a deliberate decision by a firm not to disclose a significant apparent violation to be an aggravating factor when determining what administrative sanctions, if any, will be sought. This means that if you identify an apparent violation and choose not to make a voluntary self-report, then the government penalties can be increased in an enforcement action (the rules already applied a mitigating factor when a voluntary self-disclosure has been made).

This has the appearance of a potential legal problem in the long term. The information-collection associated with self-disclosure was originally approved by OMB as a voluntary action that expected about 150 responses per year. The number of responses has been increased to 180 but the approval has been otherwise unchanged. By applying a penalty to failure to report (the aggravating factor to the civil penalty), the Commerce Department has changed the fundamental nature of this voluntary report. This change may invalidate the OMB approval, which does not appear to be updated to reflect the rule change. Thus, the aggravating factor could be a violation of the Paperwork Reduction Act’s public protection provision (which prevents the government from imposing a penalty for failing to comply with an information collection if it does not display a valid control number).

Exporting in violation of any US regulations is a criminal offense under 18 U.S.C. § 554. Thus, the new “mandatory” nature of self-reported exported violations appears to reflect a compulsion to self-incriminate. Despite common views of the Constitution as portrayed on television, this sort self-incrimination may not be prohibited. Corporations do not enjoy the privilege against self-incrimination. E.g. Curcio v. United States, 354 U.S. 118, 122 (1957). Corporate records “cannot be insulated from reasonable demands of governmental authorities by a claim of personal privilege on the part of their custodian.” Id. at 122-23. Early cases like Curcio distinguished this from compelled testimony, but later cases allowed compulsion of testimony (even testimony against the interests of the testifying person) from persons deemed to be “custodians.” Baltimore City Department of Social Services v. Bouknight, 488 U.S. 1301, 1304 (1988) (explaining that the “tension between the State’s demand for disclosures and the protection of the right against self-incrimination’ must inevitably . . . be resolved in terms of balancing the public need on the one hand, and the individual claim of constitutional protections on the other” and upholding a state disclosure requirement).

In the past I have counseled companies to carefully consider self-disclosure upon detecting an apparent export violation, and typically we have decided in favor of self-disclosures. This change will modify the analysis to be even more strongly in favor of self-disclosure.

Reporting Minor or Technical Violations

The new rule provides an abbreviated reporting mechanism for minor and technical violations. Minor and technical violations can be bundled together (as long as they are from the same quarter) and will need to include contact information and a description of the general nature and extent of the violations. The rule retains a more comprehensive reporting requirement for significant violations.

The rule provides examples of minor and technical violations: “immaterial Electronic Export Information (EEI) filing errors, inadvertent record keeping violations resulting from failed file retrieval or retention mechanisms (e.g., physical damage caused by flood or fire and/or electronic corruption due to malware, virus, or outage), incorrect use of one license exception where other license exceptions were available.”

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Export Week!

October 6, 2023 by Leave a comment

Are you struggling with export compliance? ASA is here to help!

The U.S. government has been actively investigating aircraft parts export transactions. There is a concern about circumvention which could result in aircraft parts from the United States being exported or re-exported to sanctioned destinations.

As part of the Association’s ongoing commitment to compliance, ASA will be hosting Export Week! next week. Export Week! is a series of five webinars discussing export compliance for aircraft parts exporters.

  • Monday, October 9 (11:30 am ET) – Introduction to Export Compliance and OFAC Compliance
  • Tuesday, October 10 (11:30 am ET) – Aircraft Part Compliance: Distinguishing EAR Jurisdiction (BIS) from ITAR Jurisdiction (DDTC); Identifying Your ECCN and Using it to Establish the Destination Restrictions
  • Wednesday, October 11 (11:30 am ET) – Aircraft Part Compliance: Forbidden Parties, Use-based Reasons for Control, Aviation-specific rules
  • Thursday, October 12 (11:30 am ET) – Aircraft Part Compliance: Special Destination Sanctions Including the Russia Sanctions, and Anti-Boycott Provisions
  • Friday, October 13 (11:30 am ET) – Aircraft Part Compliance: Licensing and License Exceptions

Each webinar lasts 45 minutes, with 30 minutes of training and 15 minutes for questions and answers. They are scheduled for 11:30 eastern time (lunch-time on the U.S. east coast — a nice time for a coffee break in other time zones) so grab a lunch, snack, or a cup of coffee and join us to learn about how to keep out of trouble when you export aircraft parts

You can register for the webinar series on ASA’s website. The webinars are free for ASA members. If you are not an ASA member then one registration fee allows you to register for the entire series.

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New Export Restrictions and Controls

February 24, 2023 by Leave a comment

Today the U.S. government announced that it would be sanctioning additional Russian entities. The new sanctions come from several different agencies, so this blog post is divided by agency. The blog post also covers some other changes to the export standards.

OFAC

The new sanctions from the Office of Foreign Asset Control (OFAC) include a number of Russian aviation businesses:

  • “Joint Stock Company Prepreg Advanced Composite Materials, a Russia-based company that produces an assortment of materials used in aircraft engineering.
  • Limited Liability Company Alabuga-Fibre, a Russia-based company that produces various types of carbon fibers used in aerospace and aircraft engineering.
  • Limited Liability Company Prepreg-Dubna, a Russia-based company that produces an assortment of materials used in aircraft engineering.
  • Joint Stock Company Research Institute of Graphite-Based Materials NIIGRAFIT (NIIGRAFIT), a Russia-based research institution and company that was created for the study and development of special types of carbon materials and products. NIIGRAFIT also produces materials used in rocket and space technology and the aviation industry.
  • Joint Stock Company the Urals Scientific Research Institute of Composite Materials, a Russia-based research institution and company that specializes in research, development, and fabrication of composite goods for rocket-and-space hardware.”

This is just a small part of the 22 individuals and 83 entities that were added to the sanctions lists. The new sanctions also include businesses that produce metals and carbon fibers for the aviation industry.

The U.S. Treasury Department called today’s announcement “one of its most significant sanctions actions to date.” The sanctions announcements coincide with the one-year anniversary of the Russian “Special Military Operation” in the Ukraine

BIS

Today, BIS published a new final rule that makes minor modifications to the export rules. Here are some highlights that could affect aviation:

  • ECCN 9A004.g now controls aircraft that are specially designed or modified to be air-launch platforms for sub-orbital craft.
  • Fluorinated silicone fluids were previously controlled under 1C006.b.2 but are now considered EAR99. These can be used as lubricants or fuel additives in aerospace. This does not appear to affect fluorinated silicone in a solid form, such as when used in a seal.
  • Imposes new limits for license exception STA, including as it applies to certain hot section technology
  • Refines the technology controls that apply to technology for certain engine parts including blades, vanes, tip shrouds, combustors, etc.).

On Monday, BIS is expected to publish an order that adds new entities to the denied entities list. All of the new entities are listed because of their support of the Russian military. They are organized by country, here:

Canada

  • CPUNTO Inc., and
  • Electronic Network Inc.

China

  • AOOK Technology Ltd.,
  • Beijing Ti-Tech Science and Technology Development Co.,
  • Beijing Yunze Technology Co., Ltd.,
  • China HEAD Aerospace Technology Co., and
  • Spacety Co. Ltd.

France

  • China HEAD Aerospace Technology Co.

Luxembourg

  • Spacety Co., Ltd.

Netherlands

  • China HEAD Aerospace Technology Co.

Russia

  • Dexias Industrial Products and Trade Limited Company,
  • Innovation and Technologies LLC, and
  • Promtekhkomplekt JSC.

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Many More Russian Aviation Companies Added to U.S. Sanctions List

October 4, 2022 by Leave a comment

Today, the U.S. Government published a list of 57 entities added to the BIS denied entities list. Most of the newly-listed entities are aviation-related.

Typically, you may not export to one of these entities unless you first obtain a license from BIS permitting you do perform the export. Don’t forget that the “Russia-rule,” also continues to prohibit most export transactions to Russia and Belarus (15 C.F.R. 746.8). But this addition expands the prohibition against these entities from being involved in U.S. export transactions.

Many of these entities were added because of diversion to the Russian military in violation of the U.S. Military End User (MEU) rules.

The rule became retroactively effective as of September 30, 2022. For items that were legally in transit on September 30th, there is a “savings clause” that permits them to continue on their way.

The list of newly-added companies can be found in the Federal Register at 87 F.R. 60064 (Oct. 4, 2022). The full list of BIS denied entities can be found as Supplement No. 4 to 15 C.F.R. Part 744. You can also search the consolidated screening list, which consolidates the data from several different U.S. government sanctions lists across several different federal agencies.

Here is the list of newly-added entities:

Crimea Region of Ukraine

• Subsidiary Sevastopol Naval Plant of Zvezdochka Shipyard.

Russia

• A. Lyulki Experimental-Design Bureau,
• A. Lyulki Science and Technology Center,
• AO Aviaagregat,
• Central Aerohydrodynamic Institute,
• Closed Joint Stock Company Turborus,
• Federal Autonomous Institution Central Institute of Engine-Building N.A. P.I. Baranov,
• Federal State Budgetary Institution of Science P.I. K.A. Valiev RAS of the Ministry of Science and Higher Education of Russia,
• Federal State Budgetary Institution National Research Center Institute n.a. NE Zhukovsky,
• Federal State Unitary Enterprise All-Russian Research Institute of Physical, Technical and Radio Engineering Measurements,
• Federal State Unitary Enterprise State Scientific-Research Institute for Aviation Systems,
• Federal Technical Regulation and Metrology Agency,
• Institute of Physics Named After P.N. Lebedev of the Russian Academy of Sciences,
• Institute of Solid-State Physics of the Russian Academy of Sciences,
• Joint Stock Company 121 Aviation Repair Plant,
• Joint Stock Company 123 Aviation Repair Plant,
• Joint Stock Company 218 Aviation Repair Plant,
• Joint Stock Company 360 Aviation Repair Plant,
• Joint Stock Company 514 Aviation Repair Plant,
• Joint Stock Company 766 UPTK,
• Joint Stock Company Aramil Aviation Repair Plant,
• Joint Stock Company Aviaremont,
• Joint Stock Company Flight Research Institute N.A. M.M. Gromov,
• Joint Stock Company Metallist Samara,
• Joint Stock Company Moscow Machinebuilding Enterprise named after V.V. Chernyshev,
• Joint Stock Company NII Steel,
• Joint Stock Company Remdizel,
• Joint Stock Company Special Industrial and Technical Base Zvezdochka,
• Joint Stock Company STAR,
• Joint Stock Company Votkinsk Machine Building Plant,
• Joint Stock Company Yaroslavl Radio Factory,
• Joint Stock Company Zlatoustovsky Machine Building Plant,
• Limited Liability Company Center for Specialized Production OSK Propulsion,
• Lytkarino Machine-Building Plant,
• Moscow Aviation Institute,
• Moscow Institute of Thermal Technology,
• National Research Center Kurchatov Institute,
• Omsk Motor-Manufacturing Design Bureau,
• Open Joint Stock Company 20 Aviation Repair Plant,
• Open Joint Stock Company 32 Repair Plant of Flight Support Equipment,
• Open Joint Stock Company 170 Flight Support Equipment Repair Plant,
• Open Joint Stock Company 275 Aviation Repair Plant,
• Open Joint Stock Company 308 Aviation Repair Plant,
• Open Joint Stock Company 322 Aviation Repair Plant,
• Open Joint Stock Company 325 Aviation Repair Plant,
• Open Joint Stock Company 680 Aircraft Repair Plant,
• Open Joint Stock Company 720 Special Flight Support Equipment Repair Plant,
• Open Joint Stock Company Volgograd Radio-Technical Equipment Plant,
• Public Joint Stock Company Agregat,
• Russian Institute of Radio Navigation and Time,
• Rzhanov Institute of Semiconductor Physics, Siberian Branch of Russian Academy of Sciences,
• Salute Gas Turbine Research and Production Center,
• Scientific-Production Association Vint of Zvezdochka Shipyard,
• Scientific Research Institute of Applied Acoustics,
• Siberian Scientific-Research Institute of Aviation N.A. S.A. Chaplygin,
• Software Research Institute, and
• Tula Arms Plant.

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Watch the Temporary Denial Orders that Apply to Air Carriers

July 11, 2022 by 1 Comment

In addition to the normal sanctions, BIS has been issuing Temporary Denial Orders (TDOs) against certain parties who have been caught circumventing sanctions. TDOs impose additional restrictions, and have been issued against a number of Russian and Belarusian air carriers. Many of these TDOs are based on the fact that the license exception that permits aircraft operation into Russian airspace (AVS) does not apply to aircraft registered in, owned or controlled by, or under charter or lease by Russians or Belarusians (15 C.F.R. 746.8(c)(5)); and therefore each operation of an aircraft (that was originally exported from the United States) reflects a separate violation by these carriers.

Here is a short list of SOME of the TDOs issued against airlines. This is NOT intended to be a complete list so please do your own due diligence on every transaction. Each of these is hyperlinked to the relevant Federal Register notice.

What do the denial orders mean? They mean that there is an enhanced area of exclusion for these named parties. They preclude applying for many licenses – a major exception to this is that you are allowed to apply for a license for an export that is directly related to safety-of-flight (so there is a licensing path for the aircraft parts industry).

You are also precluded from taking “any action to acquire from or to facilitate the acquisition or attempted acquisition from <the denied party> of any item subject to the EAR that has been exported from the United States.” When you see this clause in the TDO, it prohibits purchases from the denied party – including purchases that would reflect imports! This is an important element that makes the temporary denial orders different from mere export limits.

The TDOs typically prevent servicing on behalf of the <denied party>. This can include installation, maintenance, repair, modification, and/or testing.

If you are considering business that may be affected by a TDO, then read the TDO carefully and identify your compliance path. While there are exceptions for “safety-of-flight,” those exceptions typically require BIS to license the transaction.

Finally, bear in mind that standard language in the TDOs explains that:

[A]fter notice and opportunity for comment as provided in section 766.23 of the EAR, any other person, firm, corporation, or business organization related to Nordwind by ownership, control, position of responsibility, affiliation, or other connection in the conduct of trade or business may also be made subject to the provisions of this Order.

Nordwind Airlines, Leningradskaya str., building 25, office 27. 28, Moscow region, Khimki city, 141402, Russia; Order Temporarily Denying Export Privileges, 87 F.R. 38704 (June 29, 2022).

This means that related companies can be added to the TDO restrictions. It also means that companies with a “connection in the conduct of trade or business” can be added. This offers an opportunity for BIS to issue a TDO against anyone that they discover circumventing the sanctions (or attempting to circumvent them). Note that even though the provision says “after notice and opportunity for comment,” the regulations permit a TDO to be issued immediately in response to an imminent threat of violation.

As always, use this article as the start for your due diligence; but it should not be the only part of your analysis. These TDOs are issued for 180 days and can be extended, but if more than six months have gone by without an extension, then the TDO may have expired.

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BIS Expands Sanctions Against Russia and Belarus

April 15, 2022 by Leave a comment

Yesterday, BIS announced its latest round of sanctions against Russia and Belarus arising from Russia’s invasion of Ukraine. We have written about previous BIS sanctions against Russia and Belarus over the past several weeks. The previous rounds of sanctions imposed, among other things, a license requirement for all articles controlled under CCL categories 3 through 9 under a new § 746.8 of the EAR.

The latest sanctions expand that license requirement under § 746.8 to now include CCL categories 0 through 2 as well. Thus, any item specified under any ECCN is subject to an export license requirement. Although this may not seem like a broad expansion of the licensing requirements as far as aircraft parts distribution is concerned, it is important to note that many bearings are controlled under CCL 2 and certain seals, gaskets, sealants and fuel bladders specially designed for aircraft or aerospace are controlled under CCL 1. These items now require a license to Russia or Belarus.

The sanctions also further limit the availability of License Exception AVS paragraphs (a) and (b) to aircraft registered in, owned or controlled by, or under charter or lease by Belarus or a national of Belarus (bringing it in line with limitations on the exception already applicable to Russia and Russian nationals). We can therefore not rely on License Exception AVS–a commonly used license exception–to support a Russian or Belarusian aircraft.

The United States continues to impose additional sanctions as a result of the war in Ukraine. We will keep members updated as new sanctions that affect distributors arise.

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Russia-Sanctions Aimed at Aviation Businesses

March 9, 2022 by Leave a comment

Today, the Bureau of Industry and Security (BIS) published its new additions to the sanctioned entities list. Note that even though it was published today (March 9), it is effective as of March 3, 2022! We reported on this last week, so you should have had a little notice. That list includes aviation as one of the target industries.

Tomorrow, the Federal Register is scheduled to print new Treasury Department Sanctions against Russia. These sanctions include an A340-300 aircraft (MSN 955; registry # M-IABU). Other sanctioned aircraft include a Gulfstream G650 (MSN 6207; registry LX-MOW).

Last week, the Treasury Department Office of Foreign Asset Control (OFAC) updated their lists of Specially Designated Nationals to include aviation maintenance facilities, like JSC 558 Aircraft Repair Plant and airlines, like JSC Transaviaexport Airlines. Both of these companies are in Belarus. OFAC also added SDNs that have not yet been published in the Federal Register – these companies are listed in the SDN list, so they will appear in the government’s consolidated screening list; however the announcement was made in an OFAC press release rather than a Federal Register notice (these are just highlights):

  • ALTITUDE X3 LTD
  • AVANFORT OOO
  • AVIASTAR-SP AIRCRAFT MANUFACTURING ENTERPRISE
  • IRKUTSK AVIATION PLANT
  • IZHMASH-UNMANNED SYSTEMS COMPANY
  • JSC NOVOSIBIRSK AIRCRAFT PRODUCTION ASSOCIATION PLANT
  • KOMSOMOLSK-ON-AMUR AVIATION PLANT
  • ALL-RUSSIAN SCIENTIFIC RESEARCH INSTITUTE OF AVIATION MATERIALS

Remember, if you have property that belongs to any person or entity that has been blocked under the new OFAC Russian sanctions (pursuant to Executive Orders 14024 and 14065), then that property is blocked. The fact that the property is blocked means it may not be transferred, paid, exported, withdrawn, or otherwise dealt in under U.S. law. If, for example, you are managing a U.S. repair for a Russian business who gets added to the OFAC list of Specially Designated Nationals (under the authority of the Executive Order), then you may not return the part to the sanctioned party, nor may you participate in a work-around designed to circumvent the sanctions.

For most members of the ASA community, the BIS prohibitions on unlicensed exports to Russia will put a stop to unlicensed export transactions. But even if you get a BIS license, if your business partner is on the SDN list or is otherwise subject to the limitations of the Russia-related and Ukraine-related Executive Orders then you may also need a license from OFAC, as well.

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