Intelligence Action Plan, with the aim of ushering in American dominance in AI. The plan has three pillars: accelerating innovation, building AI infrastructure, and leading in international diplomacy and security. The plan includes proposals for increased export controls on certain sensitive items to “foreign adversaries,” as well as tools to facilitate exports to allied countries.17 ▪ The Bureau of Industry and Security (“BIS”) rescinded a Biden administration rule that would have imposed new export controls on certain AI model weights and exports of advanced computing integrated circuits (“ICs”) used to train AI models.18 BIS has signaled that it would implement similar rules, but to date has not issued a replacement rule. A replacement rule could significantly change the compliance obligations on data centers, data center operators, and exporters of advanced computing ICs. ▪ The Trump administration adopted and then suspended an “Affiliates Rule” that would extend license requirements associated with the Entity List, the Military End User 17 See MoFo Client Alert, A Call to Action: President Trump’s Policy Blueprint for AI Development and Innovation, July 30, 2025, mofo.com/resources/insights/250729-a-call-to-action-president-trump-s-policy-blueprint. 18 See MoFo Client Alert, AI Diffusion Rule Out but BIS Increases Compliance Obligations for Companies, June 17, 2025, https://www.mofo.com/resources/insights/250617-ai-diffusion-rule-out-but-bis-increases-compliance. 19 See MoFo Client Alerts, BIS Adopts 50% “Affiliates Rule”: Implications for Compliance and Enforcement, Oct. 1, 2025, mofo.com/resources/insights/251001-bis-adopts-50-percent-affiliates-rule-implications, and United States and China Reach Trade Agreement: Takeaways for Export and Supply Chain Controls, Nov. 13, 2025, mofo.com/resources/insights/251113-united-states-and-china-reach-trade-agreement. 20 See MoFo Client Alert, DOJ Issues First-Ever Declination Under Corporate Disclosure M&A Policy, June 24, 2025, mofo.com/resources/insights/250624-doj-issues-first-ever-declination. List, and certain sanctions programs to foreign entities owned 50% or more by listed parties.19 Given the uncertain future of these restrictions, acquirers should consider potential compliance costs associated with acquired foreign entities engaged in exports. Sanctions — Focus on Diligence and Disclosure ▪ Encouraging self-disclosure in M&A: In June, the DOJ announced its first declination under the “safe harbor” provision of its M&A policy in a sanctions/ export controls case, showing the potential benefit for acquirers who notify DOJ of national security concerns or violations at target companies in a timely manner.20 ▪ Focused attention on diligence: The nearly $11.5 million settlement by the Office of Foreign Assets Control (“OFAC”) with a PE firm emphasizes its expectation that companies “look beyond legal formalities to underlying practical and economic realities” when assessing sanctions risk. OFAC found that the PE firm engaged in prohibited indirect dealings with a sanctioned Russian oligarch where fund investments were routed through a family trust and offshore entities, notwithstanding contractual representations that no sanctioned person had an interest in the fund. Time will tell which priority takes center stage. 2025 M&A Annual Review 45
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