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Committee on Foreign Investments in the US (CFIUS) is Fired Up

Registering As A “Foreign Agent:” Advisors to Foreign Entities Risk Criminal and Civil Penalties as DOJ Doubles Down on FARA Enforcement

CFIUS has been around since 1975, when President Gerald Ford, by Executive Order, created the interagency committee to review national security implications of investments by foreigners in U.S. businesses.  For most of the time since its creation, the power of CFIUS was primarily reactive, infrequently addressing pending transactions; even then, CFIUS’s jurisdiction covered only transactions where a foreign person acquired control of a US business.

That landscape changed materially in August 2018, with the enactment of the Export Control Reform Act of 2018 (“ECRA”) and its companion legislation, the Foreign Investment Risk Review Modernization Act (“FIRRMA”).  Shortly thereafter, on October 10, 2018, CFIUS issued interim regulations under FIRRMA, creating a Pilot Program effective November 10, 2018.  Under the Pilot Program, CFIUS can consider national security risks posed by a foreign investment in the United States regardless of where the investment originates or who is the ultimate owner of the relevant U.S. business (subsidiary, joint venture, affiliated entity).  These regulatory identifications of sensitive businesses, which include specific examples, provide important guidance in determining whether a proposed transaction may fall within the ambit of CFIUS.

The regulatory ambit of CFIUS under the Pilot Program is far wider than it was before.  Until FIRRMA, investments within CFIUS’s jurisdiction were transactions in which a foreign person acquired control of a U.S. business.  Under FIRRMA and the Pilot Program, “covered transactions” extends to “investments” not necessarily involving an acquisition of control.  The investments may be debt financing, licenses, or other relationships.  In effect, anyone dealing with a transaction involving a foreign person or entity must consider the possibility that the transaction will require filings with CFIUS and satisfaction of its regulatory concerns.

For a more detailed discussion on CFIUS and its impact on foreign investment in the US, see “The Expanding Scope of the Committee on Foreign Investment in the United States” by my colleague, Peter D. Hutcheon, Esq.  If you have any questions regarding this post or any other related matters, please email me at