The Treasury Department released July 31 its annual report to Congress on the activities of the Committee on Foreign Investment in the United States, which has the authority to review, block, and even unwind certain transactions involving foreign investments in U.S. companies or operations that may jeopardize national security.

CFIUS’ powers were greatly expanded by the 2018 Foreign Investment Risk Review Modernization Act, which broadened the committee’s jurisdiction to include emerging and foundational technologies, added new national security factors for CFIUS to consider, and strengthened CFIUS’ ability to protect critical infrastructure from foreign government disruption. FIRMMA also created a requirement for parties to submit a mandatory declaration (essentially a prior notification filing) to CFIUS for certain investments by non-U.S. individuals in any U.S. business that produces, designs, tests, manufactures, fabricates, or develops one or more critical technologies.

Assistant Secretary for Investment Security Paul Rosen indicated that in 2022 CFIUS continued to review record numbers of filings and “sharpened due diligence on investors, tackled sophisticated technologies and national security risks, and launched a number of reviews to assess potential non-compliance with CFIUS regulations.” Among other actions, CFIUS:

- reviewed a total of 440 notices and declarations of covered transactions or covered real estate transactions; parties filed using the short-form declaration process in 154 instances (22 of which involved Canada, 18 Japan, 13 Germany, 11 Korea, nine France, nine Germany, and only five China) and filed through a notice in 286 instances (37 of which involved Singapore, 36 China, 18 the UK, 17 Canada, 15 Japan, 14 France, and 14 Korea);

- continued to clear a majority of cases (58 percent of distinct transactions) in either the 30-day assessment period for a declaration or the initial 45-day review period for a notice; and

- enhanced its focus on non-notified transactions to detect and assess national security risks posed by foreign investment, which often required mitigation or other measures to resolve national security risks.

While there were no presidential actions taken on transactions, a number of transactions were voluntarily abandoned or divested based on CFIUS’s national security determinations. CFIUS approved the withdrawal of 88 notices in 2022, with one notice withdrawn during the review phase and the remaining 87 after the commencement of the investigation period. In 68 of these instances, the parties filed a new notice in either 2022 (53 notices refiled) or 2023 (15 notices refiled). In most instances, the notices were withdrawn after CFIUS informed the parties that the transaction posed a national security risk to allow the parties additional time to consider CFIUS’s mitigation terms.

In 2022 CFIUS adopted mitigation measures and conditions in 52 instances and concluded action after adopting mitigation agreements with respect to 41 notices of covered transactions, with seven CFIUS agencies serving as the U.S. government signatories to these agreements. CFIUS also adopted mitigation agreements to address residual national security concerns with respect to three notices that were voluntarily withdrawn and abandoned, and measures were imposed to mitigate interim risk with respect to three notices filed in 2022.

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