Encryption Controls

Trust Our Experts To Navigate And Solve Your Encryption Control Needs

In modern society, data protection is often a top concern among businesses who practice in a virtual environment, especially when dealing with international exports.

Encryption export controls are one of the most complicated aspects of the EAR. Encryption authentication is used to safeguard all of our online transactions.

Technically, encrypting refers to an algorithm that converts data into a safe, encrypted format. This data requires a private key for the end-user to decipher, unlike plaintext, which can be accessed publicly.

Encryption Controls set by the EAR are in place to provide access control over exports that could potentially leak high-level cryptographic techniques to criminals and terrorists looking to harm a business or country.

However, there are numerous caveats, notes, and other exceptions which can apply in any particular case that could lead to a costly EAR violation.

Companies that participate in international trade can pay a heavy price if they are not familiar with cryptographic controls.

What Is EAR?

Export Administration Regulations, or EAR, are regulations administered by the Bureau of Industry and Security.

It regulates the exportation of dual-use items, commercial items, technology, and anything not controlled by the ITAR containing cryptographic technology.

EAR also offers guidance on whether the exportation of a particular item is controlled for a specific country. To know if your item is controlled by EAR, you need to complete a review of the Commerce Control List, which has ten different categories and five product groups listed on the CCL.

Almost every item under Category 5, Part 2 of the Commerce Control List is controlled because it contains encryption functionality. Cat. 5, part 2 covers the following.

  • Cryptographic Information Security: These are items that utilize cryptography.
  • Weakening Or Defecating Of Bypassed Information Security
  • Non-Cryptographic Information Security

These controls include unilateral and multilateral encryption controls and apply to exports that utilize encryption services or even mobile devices containing encrypted information that leaves the country.

EAR also can establish, implement and maintain digital signatures and different versions of cryptographic controls.

What Are Encryption Controls?

Encryption software encodes data to keep it hidden from and inaccessible to unauthorized users. This helps protect private information, enhance security, and shield sensitive data.

To enhance the security of a file or message, encryption technology scrambles the content.

You need the proper encryption key to scramble and decrypt the data. This is the most effective way to communicate sensitive information over the web.

The Department Of Commerce put forth encryption regulatory controls to ensure strong cryptography is kept out of the hands of those who wish to use it for illegal purposes, such as terrorist activity or theft.

In the US, the use of encryption regulation is driven by two concerns:

  1. The ability of high-tech industries in America to compete in the foreign market
  2. The risk of criminals compromising national security through the use of strong encryption.

Encryption controls require companies to refrain from storing encryption keys on a cloud-based storage system when local cryptographic critical management services are locally in place.

Because BIS changes encryption reporting requirements, it can be challenging to know whether or not you have a technology or a controlled product by one of these ECCNs.

Who Needs Encryption Control Services?

Data encryption enhances cybersecurity for virtual documents to ensure privacy and security.

Chances are your business transmits sensitive information over the internet daily, which means data security is crucial.

  • Personally Identifiable Information: Personal information like a driver’s license or social security number that can be used to identify someone.
  • Confidential Business Information: This refers to employee information, internal documentation, and commercial documents relevant to the running of your business.
  • Customer Information:  Customer contact information, contracts,
  • Financial Reports: Financial records and assets should be secured to prevent loss, damage, or unauthorized access.

Encrypted data, also known as ciphertext, requires a secret key or decryption key to access. This delicate information can be damaging if it becomes publicly available.

Not only will it compromise your business, but it will destroy the trust and confidence your employees, partners, and customers have in your company.

Most countries regulate encryption in one way or another. It’s regulated because it qualifies as a  dual-use technology since it has both military and commercial value.

Strategies For Avoiding EAR Violations When Registering With DDTC

Companies never intend to commit violations. Unfortunately, they are bound to happen without the proper knowledge of EAR.

Violations of the Export Administration Regulations could cause your business to be subject to administrative and criminal penalties.

They could even result in a denial of export privileges and prohibit a person from acting on any translation subject to the EAR.

Here are some strategies to use when registering for DDTC to avoid EAR violations.

Strategy To Avoid EAR Encryption Violations How It Helps 
Evaluate Your Software Or Product Against The Commerce Department’s Encryption Controls While Time Consuming, Compliance Audits Are Surefire Way To Prevent Violations And BEcome Familiar With Extensive Encryption Export Controls.
Review How New Changes To Encryption Regulations Impact Your Business Alterations To EAR Can Cause Encryption Products To Shift Categories, Leaving You With An Unexpected Violation.
Identify Whether You Should Submit An Encryption Registration To BIS Not All Exports Utilizing Encryption Need To Be Registered, Which Will Save You Time.

The best way to avoid costly penalties from EAR violations is to contact Export Solutions for a no-charge consultation and expert assistance.

Export Solutions Has Cracked The Code on Encryption Controls

At Export Solutions, we can help you answer all of your encryption questions and apply the right solution for your business.

  • Determine If Your Product Is Subject To The Commerce Department’s Encryption Controls.
  • Determine Mass Market Classifications And Submit Those Requests To BIS As Applicable.
  • File An Encryption Registration With BIS
  • Evaluate And Apply License Exception ENC
  • Review And File Your Annual Or Semi-Annual Self-Classification Reports
  • Help You Understand And Apply Recent Changes To Encryption Controls To Your New And Existing Products And Software
  • Answer All Questions And Provide Advice On BIS Encryption Controls

Export solutions offer many other services related to export compliance solutions for companies of every size. Our team of experienced trade compliance professionals are ready to assist you.

Encryption Controls FAQs

What are some common mistakes companies make with OFAC compliance?
Failure to understand sanctions, excluding OFAC lists in screenings, and an incomplete compliance program are three big mistakes companies make regarding OFAC compliance.

What is asymmetric encryption?
Also known as public-key encryption, asymmetric encryption involves using a pair of corresponding keys, one private key, and one public key, to encrypt and decrypt a file to protect it from unauthorized use.

Do companies using cryptocurrency need to follow U.S. sanctions?
Yes, businesses participating in the “crypto craze” can be targeted by OFAC, which leads to enormous penalties.