BIS Encryption Reporting Changes Should Reduce Certain CFIUS Filings, Law Firm Says
The Bureau of Industry and Security's decision to eliminate certain reporting requirements for encryption items (see 2103260019) should exempt a greater number of companies from filing mandatory declarations with the Committee on Foreign Investment in the U.S., DLA Piper said in an April 6 post.
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BIS’s encryption reporting changes will exempt exporters from filing a commodity classification request for most “mass market” products under License Exception Encryption commodities, software and technology (ENC) (see 2104050019), “making it easier” for exporters to use the license exception, the firm said. Because using the exception will be easier, and because CFIUS no longer requires mandatory declarations if the critical technology at the center of the investment transaction qualifies for License Exception ENC, the number of declarations should decline, the firm said. “[A] greater number of investment transactions involving software and technology companies should now be exempt from CFIUS mandatory declaration filings.”
The relationship between U.S. export control regulations and CFIUS requirements remains “complex,” the firm stressed. It urged affected companies to closely examine the changes. “Software and technology companies that develop or otherwise engage with encryption hardware or software products should carefully review how these changes impact their reporting obligations.”