Less Bark And More Bite? CFIUS Proposed Rule Enhancing Enforcement Capabilities

Torres Trade Law, PLLC


Torres Law, PLLC is an international trade and national security law firm that assists clients with the import and export of goods, technology, services, and foreign investment matters. We have extensive experience with the various regimes and agencies governing trade such as U.S. Customs and Border Protection (CBP), the Department of Commerce Bureau of Industry and Security (BIS), the Department of State Directorate of Defense Trade Controls (DDTC), the Department of Treasury Office of Foreign Assets Control (OFAC), the Department of Defense Security Service (DSS), the Committee on Foreign Investment in the United States (CFIUS), and others.
A new proposed rule issued by the Committee on Foreign Investment in the United States (CFIUS) seeks to expand the scope of information that CFIUS can request from parties...
United States Government, Public Sector
To print this article, all you need is to be registered or login on Mondaq.com.

A new proposed rule issued by the Committee on Foreign Investment in the United States (CFIUS) seeks to expand the scope of information that CFIUS can request from parties, expand its ability to monitor and investigate non-notified transactions, target procedural weaknesses in mitigation negotiations, and increase penalties. Written comments on the proposed rule must be received by May 15, 2024.

Below are the key takeaways from the proposed rule:

  1. Non-Notified Transactions: As the name suggests, these are transactions where no CFIUS filing was made by the parties. Currently, CFIUS can request that parties provide information to determine if the transaction is a "covered transaction." In other words, CFIUS is limited to requesting information to verify if it has jurisdiction over the transaction. The proposed rule will expand the type of information that CFIUS may request and seeks subpoena authority to obtain information about "national security considerations" and "the criteria for a mandatory" filing requirement. Thus, CFIUS would be able to engage in a preliminary review of national security risks and could, for example, ask questions related to the U.S. business' technologies, products, customer base, etc.
  2. Subpoena Authority: Currently, CFIUS can issue a subpoena to transaction parties or third parties if deemed "necessary," but the proposed rule would allow CFIUS to issue a subpoena under a deemed "appropriate" standard.
  3. Penalties: Under the proposed rule, penalties would be increased from $250,000 to $5,000,000. Currently, penalties can be imposed for violations related to submissions of material misstatements or omissions or for making false certifications to a filing. Other examples of actions that could trigger penalties include failing to submit a timely mandatory filing and violating material provisions of mitigation agreements, conditions imposed, or orders. Penalties under the proposed rule will also expand to parties providing material misstatements or omissions in response to CFIUS requests outside of the filing process such as in the case of a non-notified transaction information request.
  4. Mitigation Timelines: The proposed rule will impose a three business day period for responses to proposed mitigation terms (unless an extension is granted by CFIUS). This three-day requirement is consistent with the process for responses to questions during a filing review.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

See More Popular Content From

Mondaq uses cookies on this website. By using our website you agree to our use of cookies as set out in our Privacy Policy.

Learn More