The Department of Commerce’s ICTS rule prohibiting certain information and communications services and technology transactions went into effect earlier this week. In January, the Department committed to implement a licensing process by May 19 for entities seeking pre-approval before engaging or continuing to engage in ICTS transactions. The Department of Commerce has now announced that it is seeking public comments on the licensing process for pre-clearance of ICTS transactions by the end of April. The pre-publication notice is available here.

Commerce is seeking input on the following issues:

• Whether and which parts of the CFIUS or BIS voluntary disclosure processes it should incorporate into the licensing and preclearance process
• The benefits and disadvantages of seeking preauthorization for certain transactions and how those approaches could be implemented to ensure that national security is protected
• How to treat smaller entities in the licensing or pre-clearance process without impacting national security
• Whether certain types of transactions should not be considered for a license or pre-clearance
• Whether certain types of transactions should be prioritized for pre-clearance
• Whether the licensing and pre-clearances processes should be structured differently for different types of transactions
• Whether licenses or pre-clearances should be provided on something other than a transaction-by-transaction basis
• What categories of information Commerce should require
• The pros and cons of an approach granting fewer licenses after a shorter review period versus one granting more licenses after a longer review period
• Whether and how to address potential mitigation
• How to handle pre-clearances when the underlying transaction is subsequently modified
• Whether to allow for license renewals

The broad scope of the ICTS rule will result in a high volume of licensing and pre-clearance requests. Companies impacted by this rule should act now to provide input into the licensing process. Companies that have not yet determined whether they are impacted by the ICTS rule should do so soon. While the timing of this request for comments calls into doubt Commerce’s ability to stand up a licensing and pre-clearance process by May 19, it demonstrates commitment to ensuring stakeholder engagement in the process. 

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