A Korean company is not automatically subject to every U.S. export control or sanction simply because it does business internationally. But Korean incorporation or manufacturing does not, by itself, rule out U.S. restrictions either. The result can depend on what is being transferred, its U.S. origin or technology links, the destination and end use, the parties and their owners, and whether U.S. persons or financial institutions are involved.
Why a Korean company may need to check U.S. rules
The first question is not just where a company is incorporated. It is whether a particular item, transaction, party, or person connects to a U.S. regulatory regime. For a Korean technology company, relevant connections can include U.S.-origin goods, software, or technology; certain foreign-produced items; a U.S. person involved in a transaction; a restricted counterparty or its owners; or a destination or end use subject to controls.
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Several regimes may be relevant, and they do different jobs. The U.S. Department of Commerce’s Bureau of Industry and Security (BIS) administers the Export Administration Regulations (EAR), which regulate items subject to the EAR. The Treasury Department’s Office of Foreign Assets Control (OFAC) administers economic sanctions. A company should analyze each applicable rule separately rather than treating “U.S. restrictions” as one test.
Could the EAR cover Korean-made products or technology?
Start with the item and its status
BIS defines an “item” to include commodities, software, and technology. A transfer of source code, technical data, or other technology can therefore require attention even when no physical product crosses a border. BIS’s guidance on determining what is subject to the EAR directs exporters to assess the item’s status before deciding whether a license is required.
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Foreign production does not settle the question
Some foreign-produced items may be subject to the EAR under a foreign-direct-product rule. The applicable test depends on the particular rule and can involve the U.S.-origin technology or software, production equipment, item classification, destination, and end user. This does not mean every Korean-made product is controlled by the EAR; it also means that manufacturing outside the United States does not automatically put an item outside its scope.
Once an item is found to be subject to the EAR, the company must assess the relevant destination, end user, end use, and any applicable license requirement, exception, or other authorization. Those facts can change the answer for a transaction involving the same product.
What restricted-party screening needs to cover
Read the specific BIS list entry
BIS’s Entity List identifies persons or addresses associated with activities contrary to U.S. national-security or foreign-policy interests, or with a significant risk of such activity. A name appearing on the list is not, by itself, enough to determine the treatment of every transaction. Check the actual entry, including its license requirements and review policy, then consider the item, destination, and each party’s role.
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Look through ownership links under BIS’s 2025 rule
In its announcement of September 29, 2025, BIS said entities at least 50 percent owned by one or more Entity List or Military End User (MEU) List entities would automatically be subject to the relevant restrictions. BIS also described significant minority ownership as a red flag that calls for additional due diligence. Because this rule and its implementation may change, check the current rule, guidance, and list status when evaluating a live transaction.
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Screening only the customer’s name can miss an ownership relationship that matters. Identify direct and indirect owners, determine whether listed entities’ ownership reaches the applicable threshold, and investigate significant minority stakes or other warning signs rather than treating a clean name match as a complete review.
How OFAC sanctions can reach a Korean company
OFAC says U.S. persons must comply with applicable U.S. sanctions. Its guidance also describes circumstances in which non-U.S. persons may face exposure, including causing or conspiring to cause a U.S. person to violate sanctions or evading restrictions. Some sanctions programs also extend to certain foreign subsidiaries owned or controlled by U.S. persons. The particular program and its definitions determine the scope; do not assume every program works the same way.
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OFAC’s 50 Percent Rule generally blocks an entity that is owned, directly or indirectly and in aggregate, 50 percent or more by blocked persons, even if that entity is not separately named on the Specially Designated Nationals and Blocked Persons (SDN) List. OFAC distinguishes ownership from control: control without 50 percent ownership does not automatically block an entity under this rule, although other designation authorities may apply and OFAC urges caution.
Do not confuse the BIS and OFAC ownership tests
| Question | BIS Entity List and MEU List affiliates | OFAC 50 Percent Rule |
|---|---|---|
| Which lists are relevant? | Entity List and MEU List entities, under the BIS rule announced September 29, 2025. | Persons blocked under applicable OFAC sanctions. |
| What ownership threshold is described? | At least 50 percent ownership by one or more relevant listed entities triggers the relevant restrictions, as described by BIS. | Blocked persons’ direct or indirect ownership totals 50 percent or more. |
| What about significant minority ownership or control? | BIS identifies significant minority ownership as a red flag requiring additional due diligence. | Control without 50 percent ownership does not automatically block an entity under the ownership rule; other authorities may still apply. |
| What does the test decide? | Whether the relevant BIS restrictions apply; transaction-specific requirements still need to be checked. | Whether the entity is treated as blocked under the ownership rule; the sanctions program and other authorities also matter. |
These are distinct rules, not interchangeable versions of one ownership screen. A company should identify which regime and list apply before drawing conclusions from an ownership chart.
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A transaction review Korean technology companies can use
For each proposed sale, transfer, service, or other transaction, document the answers to these questions. A “yes” or an unresolved answer is a reason to investigate further, not a complete legal determination.
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- Define the item or transfer. Record the goods, software, technology, technical data, or service involved, including what will actually be provided and to whom.
- Establish origin and classification. Determine whether the item is subject to the EAR and document its origin and applicable classification. If foreign-produced, assess whether a foreign-direct-product rule may apply to the item and transaction.
- Map the transaction. Identify the destination, end user, end use, intermediaries, and each party’s role. Assess diversion risks as well as the stated delivery route.
- Screen parties and owners. Check relevant current U.S. lists, verify identifiers to resolve possible name matches, and examine direct and indirect ownership for the distinct BIS and OFAC rules.
- Identify U.S. connections. Determine whether U.S. persons, U.S. financial institutions, U.S.-origin items, or U.S. technology are involved, and whether a U.S.-person subsidiary or affiliate participates.
- Determine the authorization path. Check whether a license is required and whether an applicable license exception, exemption, or OFAC authorization is available. Do not proceed on the assumption that one regime’s authorization resolves another regime’s requirements.
- Recheck before acting. Verify current list entries, rules, ownership information, and transaction facts at the time of the transfer or payment. Retain the analysis and escalate unresolved issues to qualified export-control or sanctions counsel.
Build controls that keep pace with changing transactions
A March 6, 2024 interagency compliance note from Commerce, Treasury, and Justice recommends a risk-based approach to sanctions compliance. For technology companies with overseas affiliates, distributors, or complex supply chains, practical controls include:
- Keeping customer, beneficial-ownership, and geolocation information current, with refreshes when relationships or transaction patterns change.
- Applying internal controls to payments and goods involving affiliates and counterparties, not just direct shipments to customers.
- Training affiliates and relevant staff to recognize red flags and use a clear escalation route.
- Assessing sanctions and export-control risks before mergers or acquisitions, then addressing identified issues through mitigation and integration controls.
- Taking prompt remedial steps when a potential compliance issue is identified.
Screening tools can support restricted-party checks, but a name-screening result cannot replace item classification, ownership analysis, end-use review, or a transaction-specific authorization decision. Where the facts are unclear, pause the transaction and obtain specialist advice rather than treating an automated result as clearance.
What is established about the impact on Korean firms
The rules establish ways a Korean company can encounter U.S. export-control or sanctions restrictions; they do not establish that all Korean technology companies, or all Korean-made products, are affected. The official materials cited here do not quantify the number of Korean firms affected, typical licensing delays, compliance costs, or enforcement rates. A company’s exposure must be assessed from its own items, counterparties, ownership, destinations, end uses, and U.S. connections.
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In announcing the September 29, 2025 affiliates rule, Under Secretary of Commerce for Industry and Security Jeffrey I. Kessler said: “For too long, loopholes have enabled exports that undermine American national security and foreign policy interests. Under this Administration, BIS is closing the loopholes and ensuring that export controls work as intended.” This is the administration’s stated rationale for the rule, not a measurement of its effects on Korean companies.
U.S. regulations, sanctions programs, list entries, and guidance can change. The controlling requirements for a live transaction are the current rules and the facts at that time, not a general conclusion based only on a company’s Korean incorporation or a customer-name search.
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