If the Artifactory Encryption Key (artifactory.key) is in its default location under the $JFROG_HOME/artifactory/var/etc/security folder, it will be exported during a Backup or full system export.
Correspondingly, if an Artifactory Encryption Key was exported, and you now perform a full system import, the key will be copied to the default location and the Artifactory Key Encryption feature will be activated. i.e. the Artifactory Encryption Key will be used to encrypt and decrypt the imported configuration.