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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Syrian Sanctions Are Being Lifted; Exporters Still Need to Carefully Review Their Proposed Transactions

August 25, 2025 by Leave a comment

The Office of Foreign Asset Control (OFAC) plans to publish a notice rescinding Syrian sanctions in tomorrow’s Federal Register. The notice is expected to be immediately effective, upon publication.

The United States is in the process of lifting sanctions against Syria pursuant to the President’s Executive Order that was issued earlier this summer.

This does not mean that all sanctions against Syria are lifted! For example, the BIS sanctions regime still currently exists. Proposed exports to Syria still need to be carefully reviewed to ensure compliance, and may still require an export license. But this is one important step to making it easier to export aircraft parts (and other goods) to Syria.

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Export Enforcement is Earning High Level Attention

September 24, 2024 by Leave a comment

The G7 is taking an interest in export enforcement, and this could affect everyone in aviation.

The G7 has announced new cooperation and new guidance for the world’s exporting community. The G7 is comprised of Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States. The European Union also participates in the Group.

The G7 Sub-Working Group on Export Control Enforcement met today (September 24) and published new guidance on the prevention of diversion of high priority goods to Russia. Russia is a particular focus of this group partly because of the Ukrainian invasion, but also partly because of the significant efforts that Russia has made to circumvent sanctions.

The identified high priority goods included aircraft parts (Tariff Code 8807.30), avionics (Tariff Code 9014.20) and other navigational instruments and appliance (Tariff Code 9014.80). Thus, this reaffirms that aviation is a high priority target for diversion and it is also a high priority target for government enforcement.

The newest G7 guidance includes a list of red flags that should cause additional scrutiny if they arise in your transactions:

  • Sudden changes in business activity after 24 February 2022, or after subsequent changes in export controls/sanctions
  • False, inaccurate, or missing documentation
  • Concealing the end user (remember, there is a U.S. legal obligation to show end use compliance when exporting aircraft parts intended for installation on foreign aircraft (15 C.F.R. § 744.7))
  • Inconsistencies in the transaction
  • Vague details and/or incomplete information
  • Dividing an invoice value into smaller amounts to remain under value limits of sanctioned goods or export controls
  • Suspicious customer information
  • Customer has connections of concern
  • Concerning business practices
  • Last-minute changes to parties involved with the transaction from an entity in Russia or Belarus to an entity in another country
  • Payments from entities located in third countries that are not otherwise involved with the transactions, particularly through a sanctioned country
  • Customer unwilling to provide certification that it will not sell items to Russia or sanctioned parties in third countries

There are examples in the G7 document for each of these bullets so be sure to click through and look at the full list of red flags and examples. Many of the latest red flag examples represent fact patterns that we’ve seen arise in the aviation community.

There is also a recommended due diligence outline in the G7 document, but this is a very short outline that might be inadequate for most aircraft parts transactions subject to U.S. law.

The Aviation Suppliers Association will be covering export compliance analysis and due diligence topics during its popular Export Week! seminars on October 7-11, 2024. These are short (30 minutes of content followed by a 15 minute question period) lunch-time (11:30 am eastern time) session designed to educate the community about export compliance without overwhelming the audience with jargon and a mountain of regulations. The seminars are free for ASA members! I hope to see you all, there!

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US-China Trade: New Sanctions

June 5, 2024 by Leave a comment

The United States and China continue to snipe at one another through their export and import laws. The latest actions appear to have the potential to affect the aviation community.

US Import Tariff Increases

The United States announced increased import duties for certain goods imported from China. Duties are paid by the U.S. importers, so the tariffs that impose these duties are intended to incentivize importers to source their goods from nations other than China.

The new tariff changes were proposed by the USTR on May 28, and they are open for comment through June 28, 2024. The new tariffs changes that are most likely to affect the aerospace industry include (this is a partial list only!):

GoodTariff CodesOld TariffNew TariffProposed Effective Date
certain steel and aluminum productsmany codes in headings 7206 – 7229, 7301-7306, and 7601-76090-7.5%25%
August 1, 2024
Certain electronic integrated circuits8542.31.00
8542.32.00
8542.33.00
8542.39.00
8542.90.00		25%50%January 1, 2025
lithium-ion batteries (non-EV)8507.60.002207.5%25%January 1, 2026
battery parts8507.90.407.5%25%August 1, 2024

Chinese Export Restrictions

Reuters is reporting that China’s Commerce Ministry has announced new export controls on certain aviation components. The new regulations will impose licensing requirements on additional aviation components. These will apparently apply beginning on July 1, and are intended to protect China’s national security and interests.

Earlier today, Chinese Premier Li Qiang emphasized China’s rule-of-law approach. He called on Chinese government officials to raise their awareness of the rule of law and perform their duties in accordance with the law to ensure law-based government work. This seems likely to cause stricter adherence to China’s export restrictions.

ASA reviewed releases from the Ministry of Commerce and the State Council but could not yet find the details of these export restrictions. We will continue to monitor for details.

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Criminal Indictment for Sanctions Violations: Exporting Aircraft Parts to Venezuela

April 24, 2024 by Leave a comment

On Monday, the U.S. Justice Department announced a criminal indictment against six employees from two aircraft parts distributors for sanctions evasion.

The defendants are accused of a scheme to circumvent U.S. sanctions laws by exporting Honeywell Turbofan Engines, from the United States to Venezuela, where they were expected to be installed on aircraft operated by Petróleos de Venezuela, S.A. (PDVSA), the Venezuelan state-owned oil company. The Justice Department contends that the defendants concealed from their sources in the United States that the articles were destined for Venezuela and PDVSA. They did this by exporting the articles to the companies of the defendants: Novax Group S.A. and Aerofalcon S.L.

One of the defendants, George Clemente Semerene Quintero, was arrested on April 19, 2024, upon arrival at the Miami International Airport. He is PDVSA’s head of logistics, procurement and warehousing.

In November, The U.S. Bureau of Industry and Security added several companies to the Denied Entity List as a consequence of this same set of transactions, including:

  • Aerofalcon S.L. (Spain);
  • Novax Group S.A. (Costa Rica, Ecuador, Panama, Venezuela, and Russia); and
  • Zero Waste Global S.A. (Panama and Venezuela)

According to the U.S. Government, all of these companies were added to the Entity List for circumventing U.S. sanctions, by exporting U.S. origin aircraft parts to Venezuela without proper licenses.

The Federal Register explains that the circumvention was accomplished by concealing the true end user and end destination of the exports using misrepresentations and fraudulent documents. These transactions also included the filing of false Electronic Export Information.

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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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US Sanctions Six Companies over Balloon Issue

February 16, 2023 by 1 Comment

The United States (US) added six Chinese aerospace companies to its sanctions lists – these companies now appear on the ITA Consolidated Screening List as denied entities. The six Chinese companies are listed in the Federal Register:

  • Beijing Nanjiang Aerospace Technology Co., Ltd.
  • China Electronics Technology Group Corporation 48th Research Institute
  • Dongguan Lingkong Remote Sensing Technology Co., Ltd.
  • Eagles Men Aviation Science and Technology Group Co., Ltd.
  • Guangzhou Tian-Hai-Xiang Aviation Technology Co., Ltd.
  • Shanxi Eagles Men Aviation Science and Technology Group Co., Ltd.

The US Government explained that these six businesses were sanctioned for their support to China’s military modernization efforts, specifically the People’s Liberation Army’s (PLA) aerospace programs including airships and balloons and related materials and components. The same US Government notice explains that the PLA is using High Altitude Balloons for intelligence and reconnaissance activities.

Persons subject to US export regulation are forbidden from exporting to a denied party except where a US government export license or other provision of US law specifically permits the transaction

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BIS Continues to Add Aviation Businesses to the Entity List, Including AVIC Entities

December 20, 2022 by Leave a comment

The Bureau of Industry and Security (BIS) End-User Review Committee (ERC) has added several new businesses to its entities list. This list continues to include a focus on aviation companies so it is especially important for ASA members to check these lists before exporting aircraft parts.

One of the aviation companies added to the entities list is the AVIC Research Institute for Special Structures of Aeronautical Composites. This AVIC company is accused of acquiring or attempting to acquire U.S.- origin items in support of China’s military modernization. This is not the only AVIC company that has been sanctioned – the United States has also issued sanctions against these other AVIC companies (do not consider this a complete list!):

  • AVIC AVIATION HIGH-TECHNOLOGY COMPANY LIMITED
  • AVIC HEAVY MACHINERY COMPANY LIMITED
  • AVIC XI’AN AIRCRAFT INDUSTRY GROUP COMPANY LTD.
  • AVIC AVIONICS
  • AVIC AIRCRAFT CO. LTD.
  • AVIC INTERNATIONAL HOLDING CORPORATION

These entities now have a license requirement for all items subject to the export regulations. The BIS license review policy for these companies typically includes a presumption of denial, but there are some exceptions available for some goods, so if you have a potential transaction, you should (1) identify whether government sanctions appear to prohibit the transaction, (2) examine the license presumptions, (3) examine whether the special nature of your transaction changes the presumptions, and (4) consider whether a license may be available for your particular transaction.

Where there is a presumption of denial, there is a significant burden to meet in order to rebut the presumption of denial. An important part of that burden should include a demonstration of the mechanisms that will be use to prevent diversion or redirection of the export from a stated civil end use to a military end use that would not have been licensed. The exporter who wants to get a license should consider this factor, as well as considering the strategies for preventing diversion.

As aviation companies continue to get added to the BIS Entities List, it continues to be very important to check your export customers on every transaction against the Consolidated Screening List.

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