Final rule provides ‘sharper scalpel’ of penalty, enforcement to foreign investment rules

A final rule aimed at providing a “sharper scalpel” of penalty and enforcement provisions to rules governing foreign investment in the United States was issued Monday by the Treasury Department, the agency said.

The rule enhances “certain procedures” of the Committee on Foreign Investment in the United States (CFIUS), according to the Treasury (which serves as chair of the committee).

“This rule enhances CFIUS’s ability to vigorously defend the national security of the United States by ensuring our investment screening regime has a sharper scalpel to more quickly and effectively address national security risks that arise in CFIUS reviews,” said Assistant Secretary for Investment Security Paul Rosen.

More specifically, the Treasury said the final rule:

• Expands 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;
• Allows the CFIUS Staff Chairperson to set, as appropriate, a timeline for transaction parties to respond to risk mitigation proposals for matters under active review to assist CFIUS in concluding its reviews and investigations within the time frame required by statute;
• Expands the circumstances in which a civil monetary penalty may be imposed due to a party’s material misstatement and 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 CFIUS’s monitoring and compliance functions;
• Substantially increases the maximum civil monetary penalty available for violations of obligations under the CFIUS statute and regulations, as well as agreements, orders, and conditions authorized by the statute and regulations, and introducing a new method for determining the maximum possible penalty for a breach of a mitigation agreement, condition, or order imposed;
• Expands the instances in which CFIUS may use its subpoena authority, including in connection with assessing national security risk associated with non-notified transactions; and
• Extends the time frame for submission of a petition for reconsideration of a penalty to CFIUS and the number of days for CFIUS to respond to such a petition

Treasury Issues Final Regulations to Sharpen and Enhance CFIUS Procedures and Enforcement Authorities to Protect National Security