The U.S. Treasury Department is seeking to enhance the enforcement powers of the Committee on Foreign Investment in the United States (CFIUS) with a recent proposal that would give the committee new authority to oversee foreign investments. This includes the ability to subpoena companies involved in corporate acquisitions, request a broader range of information, and impose higher fines. The proposal is a response to growing scrutiny of Chinese investments in the United States, particularly targeting Chinese-owned app TikTok.
The announcement of the proposal comes amid congressional action aimed at forcing TikTok’s parent company to sell the app or face a ban in the U.S. The House of Representatives recently passed a bill in this regard, which will now be voted on in the Senate. Lawmakers have expressed frustration over what they believe is inadequate action by CFIUS against TikTok, prompting calls for stronger enforcement measures.
CFIUS is responsible for evaluating the national security implications of foreign investments in the U.S. The Treasury Department’s proposal aims to address gaps in CFIUS’ enforcement authority and align compliance tools with its expanded scope. While the proposed measures may not have a drastic immediate impact on cross-border deals, they signal a firm commitment by CFIUS to actively monitor transactions and enforce compliance.
One significant focus of the proposal is to improve CFIUS’s ability to conduct non-notified inquiries, which have seen a substantial increase in recent years. When parties choose not to file with CFIUS, the committee may proactively reach out to assess the transaction’s national security risks. The proposal aims to ensure that CFIUS has the necessary authority to carry out these inquiries and encourages full cooperation from parties during the review process.
CFIUS was established in 1975 by an executive order from U.S. President Gerald Ford to address concerns about foreign investments, particularly in response to petrodollar investments. Chaired by the Secretary of the Treasury, CFIUS is comprised of representatives from various government departments and agencies. The committee has the authority to review transactions that could result in control of a U.S. business by a foreign entity, evaluating potential risks to sensitive technology, critical infrastructure, or national security.
The Foreign Investment Risk Review Modernization Act of 2018 expanded CFIUS’s review authority to include a wider range of transactions, introduced mandatory declarations for certain transactions involving critical technologies, and provided additional resources to address national security threats. The proposal to enhance CFIUS’s enforcement and compliance powers reflects a commitment to safeguarding U.S. national security interests in the face of increasing foreign investments and evolving threats.
