On 20 October 2022, US Treasury released enforcement and penalty guidelines.
- US Treasury released the first-ever Committee on foreign investment in the US (CFIUS) enforcement and penalty guidelines, in its role as chair of the CFIUS.
- Provide public information on how CFIUS assesses violations of laws and regulations.
- Laws, regulations that govern transaction parties, including potential breaches of mitigation agreements, entered to mitigate risks to national security from transaction.
- Aims to send message that compliance with CFIUS mitigation agreements not optional.
CFUIS Enforcement Authority
- CFIUS has regulatory mandate to identify, mitigating certain national security risks.
- Must mitigate such risks while maintaining the U.S. openness to foreign investment.
- Often requires the committee to enter into agreements or impose conditions on transaction parties to mitigate risks to national security that arise from a transaction.
- Authorized to impose penalties, seek remedy by defense production act, 50 USC 4565.
- Regulations addressing imposition of penalties, remedies administered by US Treasury;
- 31 CFR 800.901, 31 CFR 800.902, 31 CFR 801.409, 31 CFR 802.901, 31 CFR 802.902.
- Guidelines detailed how CFIUS will assess whether, and what amount, to impose a penalty or take some other enforcement action for a violation of a party's obligation.
- Further, described the three categories of conduct that may constitute a violation.
- Types of conduct that may constitute a violation included failure to file; non-compliance with CFIUS mitigation, material misstatement, omission, false certification.
- Also, process the Committee generally follows in imposing penalties; and some of the factors it considers in determining whether a penalty is warranted, scope of penalty.
- Highlighted importance of prompt, full self-disclosure of potential violation conduct.
- Sources of data on which CFIUS relies: requests for information, self-disclosures, tips.
- Aggravating, mitigating factors included accountability, future compliance, harm level;
- Additionally, aggravating, mitigating factors included negligence, awareness, intent; persistence, timing; response remediation; sophistication and record of compliance.