# AI's Impact on Export Controls and Compliance Risks for Companies

> As AI becomes integral to business processes, the nuances of export controls come into sharp focus. Understanding when uploading data to AI systems constitutes an export is vital for compliance and mitigating risks.

**Source**: twobirds.com | **Published**: 2026-09-14 | **Type**: article

## Key Facts

- AI complicates export controls; companies must assess technology uploads' compliance risks.
- Export-control compliance challenges arise from AI's complex data processing and access chains.
- Companies face potential liabilities if AI-generated outputs contain controlled technology.
- Lack of visibility over AI infrastructure creates vulnerabilities in compliance and risk management.
- Firms must integrate AI governance with export controls to mitigate compliance and security risks.

## Summary

The integration of artificial intelligence (AI) into everyday business processes has raised significant concerns regarding export controls, particularly for companies handling sensitive technologies. As AI tools become commonplace for tasks such as document review and technical analysis, the question arises: when does uploading information to an AI system trigger export control regulations? This issue is critical as it highlights the complexities of compliance in an increasingly digital and interconnected landscape.

Export controls are designed to prevent sensitive technologies from falling into the wrong hands, and they apply not only to physical goods but also to intangible assets, including software and technical information. The U.S., EU, and UK export-control regimes recognize that "export" can occur through electronic means, complicating the traditional understanding of what constitutes an export. This evolving definition poses challenges for companies that may inadvertently breach regulations when using AI services.

For instance, consider a European engineer who uploads a document containing controlled technology to an AI platform for analysis. While the engineer may perceive this as a routine action, it raises critical compliance questions. Has the technology been transmitted outside its jurisdiction? Who else may have access to this information through the AI's architecture? The complexity of AI systems means that the chain of custody for data is often opaque, involving multiple stakeholders, including cloud service providers and subprocessors, which can obscure compliance obligations.

The implications for businesses are profound. Export-control compliance is no longer a straightforward matter of tracking physical shipments. Companies must now assess who can access their technology, where it is processed, and how it may be used. The concept of "deemed exports," which applies when controlled technology is shared with foreign nationals, further complicates the landscape. For example, if an AI generates new content based on uploaded controlled technology, companies must evaluate whether this output itself contains or reproduces controlled elements.

The traditional frameworks for compliance are being tested as AI's capabilities expand. Unlike conventional cloud services that primarily store data, generative AI systems analyze and transform information, creating new content that may also be subject to export controls. This necessitates a two-stage compliance analysis: first, assessing the upload of controlled technology to the AI system, and second, evaluating the AI-generated output for potential compliance risks.

As businesses increasingly rely on AI in engineering, software development, and research, the intersection of AI governance and export-control compliance becomes critical. Companies must implement robust controls around AI usage, ensuring that employees understand the implications of uploading sensitive information. This includes evaluating the nature of the material being uploaded, the location of the AI service, the accessibility of the information, and the intended use of the AI-generated output.

The evolving landscape of AI and export controls signals a pressing need for businesses to adapt their compliance frameworks. Companies must recognize that AI governance cannot exist in isolation from export-control considerations. As AI becomes more embedded in technology-intensive activities, understanding the nuances of compliance will be essential to mitigate risks associated with the inadvertent transfer of controlled technology.

Looking ahead, companies that proactively integrate AI governance with export-control compliance will be better positioned to navigate the complexities of this new environment. Establishing clear protocols for AI usage, combined with comprehensive training for employees, can help mitigate compliance risks and ensure that sensitive technologies are adequately protected. As the regulatory landscape continues to evolve, businesses must remain vigilant and adaptable, ensuring that their compliance strategies keep pace with technological advancements.

## Entities

- **Companies**: Bird & Bird
- **Technologies**: AI, cloud computing, generative AI
- **People**: Nicolò Cusimano

## Key Concepts

export controls, controlled technology, deemed export, AI governance, compliance challenges, cloud infrastructure, intangible technology transfer, export-control regimes

## Definitions

- **export controls**: Regulations that govern the transfer of controlled technology and software across borders.
- **deemed export**: The release of controlled technology to a foreign person within the same country, treated as an export to their home country.
- **generative AI**: AI systems that can analyze, transform, and generate new content based on input data.
- **cloud computing**: The delivery of computing services over the internet, allowing for storage and processing of data remotely.
- **controlled technology**: Technology that is subject to export controls due to its potential military or strategic applications.

## Use Cases

- engineering analysis
- manufacturing optimisation
- software development
- troubleshooting of controlled equipment
- generation of technical instructions

## Frequently Asked Questions

**What are export controls?**

Export controls are regulations that restrict the transfer of certain technologies and software to ensure national security and foreign policy objectives. They apply to both physical goods and intangible technology.

**How does AI complicate export control compliance?**

AI complicates compliance because it can process and generate information in ways that traditional export control frameworks do not easily accommodate. This includes challenges in identifying who accesses the technology and how it is used.

**What should companies consider when using AI with controlled technology?**

Companies should assess what technology is being uploaded, where it is processed, who can access it, how it will be used, and the intended end-use. Understanding these factors is crucial for compliance.

**What is a deemed export?**

A deemed export occurs when controlled technology is released to a foreign national within the same country, which is treated as an export to their country of citizenship or residency.

**How can companies mitigate compliance risks when using AI?**

Companies can mitigate risks by establishing clear controls on what can be uploaded to AI systems, ensuring they have visibility over the processing environment, and confirming that any uploads comply with relevant export controls.

## Links

- [Read on Welcome.AI](https://welcome.ai/content/ais-impact-on-export-controls-and-compliance-risks-for-companies)
- [Original source](https://www.twobirds.com/en/insights/2026/export-controls-and-ai-when-does-uploading-technology-become-an-export)

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Source: Welcome.AI | https://welcome.ai/content/ais-impact-on-export-controls-and-compliance-risks-for-companies