Key takeaways from the 12th Annual ACI Committee on Foreign Investment in the United States (CFIUS)
The 12th annual ACI CFIUS Conference highlighted a clear message for investors: the US remains open to capital from trusted partners, but national security scrutiny is expanding and expectations around compliance are rising.
Featuring Christopher Pilkerton, Assistant Secretary of the Treasury for Investment Security, along with current and former CFIUS members from key government departments, the conference provided timely insights intothe America First Investment Policy and the recently codified Comprehensive Outbound Investment National Security (COINS) Act.
Here are the main takeaways from this year’s conference.
America First Investment Policy
This year’s conference kicked off with a keynote interview with Assistant Secretary Pilkerton, who affirmed a focus on America First policies that improve “customer service”, while steadfastly meeting national security objectives. He said the committee is working on increasing efficiencies and reducing administrative burdens to facilitate further investment from allies and partners, where there is no nexus to foreign adversaries. Initiatives include the “Known Investor Program” aimed at “fast-tracking” transactions. But Mr. Pilkerton emphasized CFIUS’s right to review non-notified transactions and that such reviews will increase, encouraging parties to proactively engage with the committee when in doubt.
CFIUS-adjacent programs
- This year's conference also explored the close interplay between CFIUS and adjacent programs in the broader U.S. national security framework.
This includes:
- The COINS Act which codified and expanded outbound investment regulations
- The growing patchwork of state-level “CFIUS-Style” regulations and their often complex interactions with CFIUS
- AFIDA (Agricultural Foreign Investment Disclosure Act)
- International FDI regimes in both the EU and Canada and how CFIUS has helped guide and work together with them.
Compliance outlook
A central theme highlighted in the conference by security officers was the critical role of proactive and dedicated compliance efforts. Third-party auditors and monitors stressed the importance of keeping an open line of communication with the committee. It was also seen as essential to pre-identify potential risks in a transaction to proactively mitigate them. Conducting a CFIUS risk assessment early in the deal lifecycle, ideally during due diligence was suggested. All speakers emphasized the importance of creating and fostering a culture of compliance for successfully implementing and monitoring a national security agreement.
What this means for business
The America First Investment Policy aims to make investment in the US from allies more efficient while still maintaining robust safeguards and protections from foreign adversaries. Businesses will now not only need to contend with compliance with regard to FDI with CFIUS, but also when contemplating investments abroad, particularly in emerging sectors and critical technologies as outlined in the COINS Act.
The increased scrutiny of foreign acquisition of real estate and agricultural land has added another layer of regulation that varies by state on top of regular federal CFIUS obligations. This may either bolster or conflict with the opinion of CFIUS.
Lastly, the non-notified process remains a looming threat. Businesses should consider filing voluntarily, even when not mandatory, to obtain safe harbor protection. Not doing so leaves parties exposed to CFIUS action in perpetuity. The non-notified process can be more disruptive than a proactive filing (with consequences such as an unwinding or forced divestiture).
This Article is written by: Noah Seligman, Consultant