The Committee on Foreign Investment in the U.S.: A Name You Should Know

The Committee on Foreign Investment in the United States (“CFIUS”) is a federal interagency committee that is responsible for reviewing certain transactions by foreign persons (governments, individuals and businesses), if they threaten or affect the national security of the United States. In layman’s terms, the CFIUS is a federal body that reviews transactions by non-Americans that might threaten the U.S.’s security. Companies interested in foreign investment, or employing immigrant investors, should be familiar with CFIUS processes. Lack of familiarity with CFIUS operations can cost companies valuable time and resources, potentially leading to legal challenges.

A prime example of the CFIUS’s authority relates to the May 13, 2024 Executive Order issued by President Joe Biden. This Order reversed the purchase of U.S. real estate that was in close proximity to a strategic missile base in Cheyenne, Wyoming. The CFIUS discovered that Chinese nationals held the majority ownership of the entity that was looking to purchase the property.  The transaction was not filed with the CFIUS, but once the transaction was discovered, the committee performed a comprehensive review and identified possible national security risks with the transaction. The entity had been mining cryptocurrency within one mile of an Air Force base and was forced to undo the transaction. 

While this situation is obviously an extreme example of the lengths that the CFIUS might take in order to ensure foreign investment does not threaten national security, it also demonstrates the importance of disclosing certain transaction to the CFIUS. Understanding CFIUS regulations is especially important to immigration attorneys and others who regularly advise foreign investors, like EB-5 visa holders, or foreign nationals on H-1B, L-1, O-1, E-1 or E-2 visas who are interested in investing in U.S. businesses, including foreign businesses that are doing business in the United States through a U.S. office of a foreign company.

When a CFIUS Filing is Required

A disclosure must be filed with the CFIUS when a foreign person, entity, or government acquires an interest in a U.S. business that may pose a national security risk.  In order for CFIUS to have jurisdiction over the transaction, the U.S. business in question must be one that works with particularly sensitive technologies; owns, operates, or supports U.S. critical infrastructure (e.g. financial services, transportation providers, etc.); or has access to sensitive personal data of U.S. citizens. These areas are referred to as “critical technologies,” “critical infrastructure,” and “sensitive personal data,” so the CFIUS refers to these as “TID” (technology, infrastructure, data) U.S. businesses.

Transactions that are covered by CFIUS review are

• transactions that could result in a foreign person, entity, or government obtaining ownership or control of a U.S. business;
• investments by a foreign person into a U.S. business that is not affiliated with them;
• certain real estate transactions;
• changes in a foreign person’s rights in a U.S. business that could result in a control transaction or investment; and
• transactions structured to avoid CFIUS review.

Why Should You Care?

Investors should err on the side of caution when determining whether to file a voluntary CFIUS disclosure. The Committee recently revealed enforcement actions taken in 2023 and 2024 that resulted in fines ranging from $100,000 to $60 million. The CFIUS employs a team of people dedicated to reviewing “non-notified” transactions, or unreported transactions, and there is no statute of limitations on when the Committee could begin reviewing a transaction. Voluntarily filing a disclosure provides a safe harbor from compelled review, and the CFIUS will ordinarily issue a “no action” determination within 30 days, meaning that CFIUS will not review the transaction further. Even if CFIUS determines further review is necessary, it opens up a dialogue with the stakeholders to determine ways to mitigate national security risk. This dialogue can be incredibly valuable in avoiding surprise fines, sanctions or generally mitigating risk to the investors. 

For questions about CFIUS review, determining whether or not to file a voluntary disclosure, or any other employment immigration issues that you may face, contact a Dinsmore & Shohl immigration attorney.