CFIUS Annual Report Details 2023 Efforts to Address National Security Risks

In a just released 2023 Annual Report to Congress, the Committee on Foreign Investment in the United States ("CFIUS") detailed its activities in reviewing foreign investments in US businesses for national security risks.

The report covered transactions filed with CFIUS in calendar year 2023, including interactions with foreign investors from a number of countries including Canada, Japan and France. CFIUS provided comprehensive data on the volume and nature of covered transactions, declarations and notices, trends and specific outcomes. CFIUS also reported on significant cases, including the imposition of penalties and compliance measures to underscore its commitment to safeguarding national security amid evolving global investment patterns.

In an introductory message, Assistant Secretary of the Treasury Paul Rosen reported that in 2023, CFIUS:

• "assessed or imposed four penalties, more than double the total number that CFIUS has previously imposed in its nearly 50-year history, and the first under the regulations implementing the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA);"
• issued "the first ever formal determinations of noncompliance specifically in connection with failure to comply with mandatory filing provisions;"
• reduced "the withdraw and refile rate for the first time in five years, from 23 percent in 2022 to 18 percent, as well as increasing the number of transactions cleared in the first 30- or 45-day period from 58 percent in 2022 to 66 percent in 2023."

He also highlighted that in 2023:

• CFIUS "determined that New Zealand and the United Kingdom constitute excepted foreign states under FIRRMA;"
• Treasury issued a final rule on behalf of CFIUS that added "eight military installations to the list at appendix A of the Committee's regulations related to real estate transactions;"
• "Secretary of the Treasury Janet L. Yellen and Mexico's Secretary of Finance and Public Credit, Rogelio Ramírez de la O, signed a Memorandum of Intent to affirm the importance of foreign investment review in protecting national security and express their desire to establish a bilateral working group for regular exchanges of information about how investment reviews can best protect national security."