Regularization of Engagement In Encryption Items

Policy of Control and Licensing of Commercial Encryption Items

Publicized on behalf of the Ministry of Defense Director General
on September 24th, 2000.

General Engagement in Encryption Items in Israel, is controlled under the Law Governing the Control of Commodities and Services - 1957 (5717) Order Regarding the Engagement in Encryption Items - 1974 (5734). (Hereinafter: "Encryption Order"), which was legislated for purposes of law enforcement and the protecting of Israel's national security. The Policy aims to balance between national security interests on the one hand and preserving competitive Hi-tech Industry on the other, whilst enabling users to engage in encryption without over-burdening restrictions. .a Following the 1998 amendment of the "Encryption Order" - which, amongst others, transferred the authority of Control and Licensing to the Director- General of the Ministry of Defense - The Commercial Encryption Items Export Controls Policy was updated in November 1999. .b Further to updating the Export Policy and in order to facilitate and assist the Israeli Encryption Industry and users of Encryption Items in the fields of development, manufacture and sale, it was decided to update Israel's Policy of Engagement in Commercial Encryption Items within Israel. .c Following herewith is the detailed policy. .b	.1
Use A person is exempted from applying for a license for Engagement in Commercial Encryption Items subject to the following conditions: The product or Encryption Items was purchased from a license holder for sale and distribution of Commercial Encryption Items (hereinafter: "License Holder"). The product or Encryption Item was "Downloaded" from the Internet for personal use for Data Security or Electronic Signature. .a The "Certification Authority", as defined in the Electronic Signature Bill of 2000, authorized under law to issue Electronic Signatures: Will be exempt from receiving a License for Engagement in Encryption if the Encryption Item is purchased from a license holder. Should the "Certification Authority" request to import, independently, Encryption Items for Electronic Signature, it is authorized to do so prior to receiving a license, subject to the following: Immediate notification of the Ministry of Defense upon the beginning of the use of the Encryption Items. Submission of application for a License for Engagement in Encryption Items, including required technical documentation. Submission of Encryption Items for technical review according to Ministry of Defense requirements. .b With regard to financial institutions supervised by the State (such as banks and insurance companies) the Advisory Committee to the Director-General of IMOD is reviewing additional reforms in the licensing process similar to those granted to the "Certification Authorities" (item b above). .c	.2
Development and production Anyone wishing to engage in development of Commercial Encryption Items shall submit an application for an Engagement License, and will be granted a License for Development and Production. .a Engagement in "Downloading" of Encryption software or algorithms from the Internet, for purposes of development or combining the algorithm in an encryption item, shall require an Engagement License for Development, Production and/or Combination. .b A technical review of the encryption item is mandatory. .c	.3
Import for sales and distribution purposes In case of an application for Import of Commercial Encryption Items to Israel, the applicant will be required to submit to the Ministry of Defense the necessary technical information and /or a sample of the product and/or any necessary additional information for completing the technical review. Following the technical review, the applicant will be given an Import License for the purpose of distributing and selling within the borders of the State of Israel. .a In the event of a request by a foreign company wishing to sell Encryption Items directly to users in Israel (without a distributor or local representative) the company representative or a person empowered by it will be given a License for Selling and Distributing, following the product's technical review, similar to those mentioned in item 4a. above. .b Import of Commercial Encryption Items for personal use does not require an Encryption Items Engagement License. .c	.4
Sales within Israel A person granted a License for Engagement in Development, Production or Import, following a technical review, will receive a License for selling and distributing of Encryption Items within Israel excluding, the Palestinian Authority. .a In case of a request for sale of Commercial Encryption Items to a customer in the Palestinian Authority, the applicant will approach the Ministry of Defense, prior to executing the sale, for a License for Sales to the Palestinian Authority. .b Sales reports of sales of Commercial Encryption Items, as stipulated in items 5a and 5b above, shall be submitted to the Ministry of Defense every three months or at additional time points, at demand. .c	.5
Export (In accordance with the Declaration of the Director-General of the Ministry of Defense of 29th November, 1999). Subject to the provisions of the Encryption Order, including the obligation to submit a license application to engage in encryption items and have the IMOD scrutinize the said application, the applicants shall be granted a license to export commercial encryption items, without limiting the key length, to all non-governmental end users in most countries world-wide. For some countries, the license shall also be valid regarding governmental end users. .a Licenses shall not be granted for the export of encryption items to a small number of countries. .b Those engaged in the export of encryption items shall still be obligated to report to the IMOD. The reporting format shall be as prescribed by the IMOD. .c Export licenses for encryption items shall be granted after scrutiny by the IMOD, and the license will have to be renewed on an annual basis. .d Commercial Encryption know-how and technology is subject to export control. .e This policy governing the control of the export of encryption items became effective as of the end of January 2000. .f	.6

Import of Commercial Encryption Items to the State of Israel for the purpose of selling and distribution

Ministry of Defense policy update - July 2001

Financial institutions supervised by the State of Israel under law i.e. Banks and Insurance Companies.
Hospitals and Medical Institutions supervised by the State of Israel under law.
Academic Institutions supervised by the State of Israel under law.
Government Ministries and Statutory Institutions.
Security Forces (i.e. IDF, and Israeli Police etc.).

A unique licensing track

Name of commodity \ encryption item.
Commodity Description and functionality.
Encryption algorithm and relevant key length for each algorithm.

Supervising sub distributors

The importer is a license - holder.
The existence of a legally binding agreement between the license - holder and the distributor, in which the distributor is made aware of the legal situation regarding Encryption Control as well as of Ministry of Defense policy.
Sales data shall be saved by the license - holder (importer) and reported to the Ministry of Defense upon request.
The importer shall submit to the Ministry of Defense a complete list of distributors, to be updated on a regular basis.

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