Enforcement & Compliance

CFIUS has more than doubled its staff in recent years and established the Office of Investment Security Monitoring and Enforcement to monitor foreign investments in the United States that are not voluntarily submitted to CFIUS for review, which it calls “non-notified” transactions; enforce its mandatory declarations regulations with respect to “non-declared” transactions; oversee compliance with CFIUS mitigation agreements, conditions, and orders; and, administer and enforce civil monetary penalties for violations of applicable CFIUS regulations and mitigation agreements, conditions, or orders.

CFIUS issued Enforcement and Penalty Guidelines in late 2022 that provide insight into its focus and priorities. CFIUS identifies three categories of acts or omissions that may constitute a violation of its rules and regulation: (1) a failure to timely submit a mandatory declaration or notice, as applicable; (2) conduct that is prohibited by or otherwise fails to comply with CFIUS mitigation agreements, conditions, or orders; and, (3) material misstatements in or omissions from information filed with CFIUS, and false or materially incomplete certifications filed in connection with assessments, reviews, investigations, or mitigation agreements, including information provided during informal consultations or in response to requests for information.  CFIUS strongly encourages prompt and complete written self-disclosure to report acts or omissions that might constitute a violation. 

CFIUS has discretion in determining when a penalty is appropriate, including by considering applicable aggravating and mitigating factors including accountability; sophistication and record of compliance; level of negligence, awareness and intent; harm; timing and persistence; as well as response and remediation. Civil penalties can reach $250,000 or the value of the transaction, whichever is greater, depending on the nature and extent of the violation. 

One indication of the aggressiveness with which CFIUS approaches non-notified transactions and potential violations is the notation on the CFIUS website that “members of the public are encouraged to send CFIUS tips, referrals, or other issues related to national security risks and foreign investment in the United States.”

In April 2024, CFIUS proposed new rules that would explicitly authorize and expand the information requested by CFIUS on non-notified or declared transactions and require parties to respond.  The proposed rules would also increase civil penalties up to $5,000,000 or the value of the transaction, whichever is greater, depending on the nature and extent of the violation.