License Exception ENC, in § 740.17 of the Export Administration Regulations (EAR), is how most items that stay in 5A002, 5D002 or 5E002 after the Cryptography Note are exported without a licence. Those items are controlled for national security (NS), anti-terrorism (AT) and encryption items (EI) reasons, which on the Country Chart means a licence to most destinations. ENC removes that need for many destinations, subject to the paragraph used, its filings and its restrictions.
What License Exception ENC covers
ENC can authorise exports and reexports of encryption commodities, software and technology classified in 5A002, 5B002, 5D002 and 5E002, including components, to many destinations. What it allows depends on the paragraph used and its conditions. It does not cover items controlled for other reasons in the same product unless those reasons also allow it.
The main routes within § 740.17
| Paragraph | Used for | What it requires |
|---|---|---|
| § 740.17(a) | Exports to certain close partners and to U.S. subsidiaries | Broad authorisation, including for internal development, with few conditions |
| § 740.17(b)(1) | Items eligible after a self-classification report | Exportable once the exporter has filed its annual self-classification report |
| § 740.17(b)(2) and (b)(3) | Items requiring a classification request | Exportable after BIS reviews a classification request, with a waiting period |
The paragraph depends on the item's functions. Network infrastructure, cryptanalytic items and custom cryptography, for example, tend to fall in the more restricted paragraphs.
What is § 740.17(b)(2)?
Items under § 740.17(b)(2) are the more sensitive ones. Like (b)(3) items, they can be exported only after BIS reviews a classification request, and they have restrictions for government end users outside a listed group of countries.
Reporting under ENC
Self-classification reports are annual. They apply to (b)(1) items and are filed with BIS and the ENC Encryption Request Coordinator.
Semi-annual sales reports are needed for certain (b)(2) and (b)(3) items exported to non-exempt destinations.
For the history of these filings, see what replaced encryption registration.
Restrictions on ENC
- no exports to embargoed destinations (Country Group E:1 and E:2);
- no exports to prohibited end users or for prohibited end uses (Part 744);
- for the more sensitive paragraphs, a licence is still needed for many "government end users" outside the listed partner countries;
- the general restrictions of § 740.2 apply to ENC as to every exception.
Government end users: the restriction that trips people up
For items in the more sensitive ENC paragraphs, exports to "government end users" outside the listed partner countries generally need a licence. The EAR defines government end users broadly: national, regional and local government departments and agencies, and some government-owned entities performing governmental functions. Utilities, universities and state-owned commercial companies need case-by-case analysis. When a customer is in the public sector, check the definition before relying on ENC.
How to use License Exception ENC step by step
- Confirm the item is 5A002, 5D002 or 5E002 and is not mass market. See the mass-market release.
- Identify the ENC paragraph from the item's functions.
- Make the required filing and wait any required period. The two filing types are compared in self-classification vs. a BIS classification request.
- Screen parties and check end use and government end users (how to screen parties).
- Record "ENC" in export filings and keep the filing references.
- Make sales reports where required.
Common mistakes with ENC
- using ENC for a restricted paragraph item to a government end user;
- forgetting the annual self-classification report;
- assuming a mass-market filing covers a non-mass-market variant;
- not recording the ENC paragraph relied on.
ENC and other controls on the same item
ENC covers the encryption reasons for control. A product may also be controlled for another reason, for example a 5A002 function inside a 5A001 telecommunications system. In that case both classifications and their licence requirements must be addressed, because ENC does not authorise the non-encryption control.
Frequently asked questions about ENC
Does ENC need a licence application?
No. It is an exception, but it often needs a filing and, for some items, a waiting period after a classification request.
Can ENC be used for technology?
Yes, for 5E002 technology within its conditions, with more restrictions than for commodities and software.
How do I record ENC?
Use the ENC licence exception code in the export filing and keep the classification request or report references.
ENC in ECCN.help
After an encryption classification in the ECCN.help Classification Workflow, the licence check shows the reasons for control against your destination and lists ENC among the exceptions to consider, with the conditions to check. For the other exceptions, see the licence exceptions overview, and for how items reach 5A002 in the first place, encryption export controls explained.
ECCN.help provides research and assistance, not legal advice. Verify every result against the regulation.