U.S. Sanctions and Export Controls: New Russia Restrictions and Expanded Ownership Screening Enforcement Expectations for AML Violations
סנקציות ובקרות יצוא של ארה"ב: מגבלות חדשות על רוסיה, הרחבת הבדיקות בנוגע לבעלות, וציפיות לאכיפה במקרים של הפרות בתחום איסור הלבנת הון
Question: What should Israeli companies review following the new Russia sanctions legislation and ahead of the scheduled reinstatement of the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) Affiliates Rule?
Answer: Two developments warrant attention: the enactment of new U.S. Russia-related sanctions and tariff measures, and the scheduled return of export restrictions covering certain unlisted affiliates of restricted entities. Together, they call for a review of counterparties, ownership structures, supply chains and screening capabilities.
What has changed regarding Russia and Iran?
On September 18, 2026, President Trump signed the Lindsey O.Graham Sanctioning Russia and Iran Act of 2026 into law. The Act combines Russia-related sanctions and trade restrictions with an extension of the Iran Sanctions Act through 2031. The measures include asset-blocking and visa restrictions against covered persons, restrictions on new U.S. investment in Russia and purchases of Russian sovereign debt, and prohibitions involving U.S.-produced energy products. Thetariff provisions provide for additional duties of up to 500% on Russian goodsand up to 100% on goods from qualifying countries purchasing Russian energy or facilitating Russian oil sanctions evasion.
What is the BIS Affiliates Rule, and when is it expected to return?
BIS introduced the Affiliates Rule in September 2025 and subsequently suspended it for one year. Under the published suspension rule, the provisions are scheduled to return on November 10, 2026, absent further regulatory action.
The Rule extends relevant export-control restrictions to foreign entities owned 50% or more, directly or indirectly, individually or in the aggregate, by covered restricted owners. These include Entity List and Military End User List parties, specified Specially Designated Nationals (“SDN”) designations covered by section 744.8 of the Export Administration Regulations (“EAR”), and entities already restricted through ownership. Consequently, an entity may require a license even though its own name does not appear on a restricted-party list.
Why is ownership diligence becoming more important?
Under the BIS Rule, where a company knows that a counterparty has a covered listed owner but cannot establish the ownership percentage, it must resolve the issue. Relevant end-user requirements can also attract strict-liability enforcement. A risk-based diligence process therefore needs to produce reliable ownership information and a documented decision.
For Israeli exporters, the review should begin with whether the goods, software or technology are subject to the EAR. It should then examine relevant transaction parties and ownership chains. Existing onboarding files and screening services may need enhancement, particularly where they identify listed names without tracing ownership.
What does the Applied Materials case illustrate?
Enforcement exposure is substantial. On February 11, 2026, BIS announced a $252 million penalty against Applied Materials for exporting semiconductor manufacturing equipment without required licenses. According to BIS, after the Chinese customer was placed on the Entity List in 2020, Applied Materials shipped ion implanters to its Korean subsidiary for assembly and then onward to China during 2021–2022. The settlement also required multiple audits of the company’s export-compliance program and annual certifications to BIS.
The practical takeaway is that companies should assess the ultimate customer and the entire production and delivery chain. Assembly or shipment through a third country should not be assumed to remove U.S. export-control requirements.
Practical Takeaways:
* Assess product : jurisdiction: establish which goods, software and technology are subject to the EAR before evaluating licensing requirements.
* Refresh counterparty: information: obtain ownership charts and supporting records, with obligations to notify material changes.
* Review commercial: protections: address sanctions and export-control representations, end-use commitments, tariff allocation and suspension rights.
For Israeli companies, the immediate task is to determine whether existing compliance processes can identify restricted ownership and explain how each exposed transaction has been cleared.
*The contents of this message, current at the date of publication, are for reference and general informational purposes only and do not constitute legal advice. You should contact your attorney to obtain advice with respect to any particular legal matter. You should not act or refrain from acting on the basis of information in this publication without first seeking legal advice from counsel in the relevant jurisdiction. Only your individual attorney can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation.
סנקציות ובקרות יצוא של ארה"ב: מגבלות חדשות על רוסיה, הרחבת הבדיקות בנוגע לבעלות, וציפיות לאכיפה במקרים של הפרות בתחום איסור הלבנת הון
Question: What should Israeli companies review following the new Russia sanctions legislation and ahead of the scheduled reinstatement of the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) Affiliates Rule?
Answer: Two developments warrant attention: the enactment of new U.S. Russia-related sanctions and tariff measures, and the scheduled return of export restrictions covering certain unlisted affiliates of restricted entities. Together, they call for a review of counterparties, ownership structures, supply chains and screening capabilities.
What has changed regarding Russia and Iran?
On September 18, 2026, President Trump signed the Lindsey O.Graham Sanctioning Russia and Iran Act of 2026 into law. The Act combines Russia-related sanctions and trade restrictions with an extension of the Iran Sanctions Act through 2031. The measures include asset-blocking and visa restrictions against covered persons, restrictions on new U.S. investment in Russia and purchases of Russian sovereign debt, and prohibitions involving U.S.-produced energy products. Thetariff provisions provide for additional duties of up to 500% on Russian goodsand up to 100% on goods from qualifying countries purchasing Russian energy or facilitating Russian oil sanctions evasion.
What is the BIS Affiliates Rule, and when is it expected to return?
BIS introduced the Affiliates Rule in September 2025 and subsequently suspended it for one year. Under the published suspension rule, the provisions are scheduled to return on November 10, 2026, absent further regulatory action.
The Rule extends relevant export-control restrictions to foreign entities owned 50% or more, directly or indirectly, individually or in the aggregate, by covered restricted owners. These include Entity List and Military End User List parties, specified Specially Designated Nationals (“SDN”) designations covered by section 744.8 of the Export Administration Regulations (“EAR”), and entities already restricted through ownership. Consequently, an entity may require a license even though its own name does not appear on a restricted-party list.
Why is ownership diligence becoming more important?
Under the BIS Rule, where a company knows that a counterparty has a covered listed owner but cannot establish the ownership percentage, it must resolve the issue. Relevant end-user requirements can also attract strict-liability enforcement. A risk-based diligence process therefore needs to produce reliable ownership information and a documented decision.
For Israeli exporters, the review should begin with whether the goods, software or technology are subject to the EAR. It should then examine relevant transaction parties and ownership chains. Existing onboarding files and screening services may need enhancement, particularly where they identify listed names without tracing ownership.
What does the Applied Materials case illustrate?
Enforcement exposure is substantial. On February 11, 2026, BIS announced a $252 million penalty against Applied Materials for exporting semiconductor manufacturing equipment without required licenses. According to BIS, after the Chinese customer was placed on the Entity List in 2020, Applied Materials shipped ion implanters to its Korean subsidiary for assembly and then onward to China during 2021–2022. The settlement also required multiple audits of the company’s export-compliance program and annual certifications to BIS.
The practical takeaway is that companies should assess the ultimate customer and the entire production and delivery chain. Assembly or shipment through a third country should not be assumed to remove U.S. export-control requirements.
Practical Takeaways:
* Assess product : jurisdiction: establish which goods, software and technology are subject to the EAR before evaluating licensing requirements.
* Refresh counterparty: information: obtain ownership charts and supporting records, with obligations to notify material changes.
* Review commercial: protections: address sanctions and export-control representations, end-use commitments, tariff allocation and suspension rights.
For Israeli companies, the immediate task is to determine whether existing compliance processes can identify restricted ownership and explain how each exposed transaction has been cleared.
*The contents of this message, current at the date of publication, are for reference and general informational purposes only and do not constitute legal advice. You should contact your attorney to obtain advice with respect to any particular legal matter. You should not act or refrain from acting on the basis of information in this publication without first seeking legal advice from counsel in the relevant jurisdiction. Only your individual attorney can provide assurances that the information contained herein – and your interpretation of it – is applicable or appropriate to your particular situation.
