BIS EAR End-User Controls: Expansion and Consolidation for SDN-Listed Persons

Mechanism

The rule consolidates three previously separate EAR provisions — §§ 744.8, 744.10, and 744.20 — into a single revised § 744.8 that imposes a licence requirement on the export, reexport, and in-country transfer of any item subject to the EAR whenever an SDN-listed person is involved as purchaser, consignee, or end-user.

Prior to this rule, EAR § 744.8 covered only a narrow set of items (e.g., luxury goods) for SDNs designated under specific programmes. The new rule:

1. Expands scope to all EAR items — eliminating the prior luxury-goods limitation for covered programmes. 2. Adds two new OFAC programmes to EAR coverage: - ILLICIT-DRUGS-EO14059 (narcotics-related SDNs under EO 14059, signed December 2021) - TCO (transnational criminal organisations under EO 13581) 3. Retains existing coverage for terrorism (SDGT, FTO), WMD proliferation (NPWMD), Russia (RUSSIA-EO14024), Belarus (BELARUS-EO14038, BELARUS), and Ukraine-related programmes (EO 13660, 13661, 13662, 13685), plus narcotics-trafficking programmes SDNT and SDNTK. 4. Removes §§ 744.10 and 744.20, which become redundant under the consolidated § 744.8. 5. Sets a presumption of denial for all licence applications under § 744.8 — no licence exception can overcome the restriction.

The rule reaches transactions that OFAC sanctions may not prohibit, because the EAR applies to items subject to US jurisdiction regardless of whether a US person is involved. A non-US exporter shipping an EAR-controlled item to an SDN-listed end-user must now obtain a BIS licence even if no OFAC nexus exists.

OFAC Programmes NOT covered

Despite the expansion, several major OFAC programmes are excluded from § 744.8: Global Magnitsky (GLOMAG), Malicious Cyber-Enabled Activities (CYBER2), Iran, Venezuela, Syria, and Cuba. Iran and Syria are already subject to comprehensive EAR Part 746 embargoes; the others remain outside the EAR end-user-controls framework as of this rule.

Downstream implications

• Exporters face a broadened compliance burden: any EAR-subject transaction must screen all

parties against 14 OFAC programmes, not just for OFAC sanctions purposes but for BIS licence requirements — even when the exporter is not a US person.

• The presumption-of-denial standard makes BIS licence applications under § 744.8 effectively

unusable; the practical effect is a near-total prohibition on EAR items for covered SDNs.

• Non-US companies exporting US-origin or US-technology items are directly in scope: the rule

explicitly targets reexports and in-country transfers.

• The addition of TCO and ILLICIT-DRUGS-EO14059 programmes is a signal of convergence between

counter-narcotics/crime enforcement and export-controls — a trend that may expand to further OFAC programmes in subsequent rulemaking.

Open questions

• Will BIS extend § 744.8 coverage to additional excluded programmes (Global Magnitsky, Cyber2)?
• Does the rule interact with the affiliates rule (2025-09-30, one-year suspension 2025-11-10)?
• How are non-US exporters practically notified of SDN status changes and expected to comply?