The Treasury Department has updated the website of the Committee on Foreign Investment in the U.S. to share more details about how CFIUS approaches compliance and enforcement.
CFIUS 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.
CFIUS can impose civil monetary penalties and seek other remedies for violations of the relevant law (Section 721 of the Defense Production Act), associated regulations, or related mitigation orders, conditions, or agreements.
The website update indicates that CFIUS is increasing its investment in and focus on its monitoring and enforcement efforts. After issuing only two civil penalties from its creation in 1975 through 2022, CFIUS is increasingly exercising its enforcement remedies, and the website now lists a number of specific civil penalty actions taken in recent years. CFIUS is also dedicating substantially increased resources and staff and further building out institutional business tools and practices to further strengthen its compliance and enforcement functions. For example, there is now a CFIUS-wide monitoring and enforcement case management system to improve data collection, sharing, retention, and analysis, which is designed to allow more targeted, prompt, and systematic reviews of potential compliance matters and associated enforcement.
Most recently, Treasury proposed to amend CFIUS’ regulations to further strengthen its enforcement authorities, including by increasing the maximum penalties for violations and expanding the types of information that may be required. CFIUS also continues to actively engage with lawyers, auditors, and other professional service providers to advance stronger compliance, receive feedback, and discuss voluntary filings, voluntary self-disclosures, and mandatory declarations.
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