US Treasury Issues Advance Notice of Proposed Rulemaking Increasing CFIUS Enforcement Authorities

On April 11, 2024, the US Department of the Treasury (“Treasury”) announced an Advance Notice of Proposed Rulemaking (“ANPRM”) that would amend several provisions of Committee on Foreign Investment in the United States (“CFIUS”) regulations. The purpose of the proposed rule is to “enhance certain CFIUS procedures and sharpen its penalty and enforcement authorities.” In its press release, Treasury explained that the proposed rule “reflects CFIUS’s . . . increased focus on monitoring, compliance, and enforcement.” Treasury also noted that the proposed rule is “the first substantive update to the mitigation and enforcement provisions of the CFIUS regulations since the enactment and implementation of the Foreign Investment Risk Review Modernization Act of 2018.” According to Treasury, the proposed rule “hones CFIUS’s ability to accomplish its national security mission consistent with the United States’ open investment policy.” 

Proposed key changes include: 

• “Expanding the types of information CFIUS can require transaction parties and other persons to submit when engaging with them on transactions that were not filed with CFIUS” (also known as “non-notified transactions”);
• Requiring transaction parties to substantively respond within three business days “to risk mitigation proposals for matters under active review”;
• “Expanding the circumstances in which a civil monetary penalty may be imposed due to a party’s material misstatement [or] omission, including when the material misstatement or omission occurs outside a review or investigation of a transaction and when it occurs in the context of the Committee’s monitoring and compliance functions”;
• Increasing the maximum civil monetary penalty to $5 million “for violations of obligations under the CFIUS statute and regulations, as well as agreements, orders, and conditions authorized by the statute and regulations”;
• Using “a new method for determining the maximum possible penalty for a breach of a mitigation agreement, condition, or order imposed”;
• “Expanding the instances in which CFIUS may use its subpoena authority, including when seeking to obtain information from third persons not party to a [notified] transaction . . . and in connection with assessing national security risk associated with non-notified transactions”; and
• Extending both time frames for “submission of a petition for reconsideration of a penalty” to CFIUS and the number of days for CFIUS to respond to 20 business days. 

Treasury is seeking public comment in response to the proposed rule. Written comments are due 30 days after the date of publication of the ANPRM in the Federal Register.