WASHINGTON: The US government is likely soon to spell out how it will enforce oversight of foreign investment in the United States, a US official said on Thursday (Nov 7), after a law last year expanded the agency's authority to crack down on harmful Chinese investment.
Thomas Feddo, who oversees the Committee on Foreign Investment in the United States, which vets foreign investment for national security concerns, said enforcement would be a priority for the agency. He noted, however, that he recognises the need for clarity on how it will work.
"I suspect that somewhere in the future, sooner rather than later, we will promulgate enforcement guidelines that will give greater clarity to the business community about how we will exercise our enforcement authorities," Feddo said at an event in Washington.
CFIUS has flexed its muscle in recent months to block and regulate Chinese investment in the United States after Congress passed the so-called FIRRMA law last year.
That legislation gave CFIUS more authority to oversee foreign investment in a bid to crimp access to sensitive technology by foreign adversaries that could be used to harm US national security or eliminate a US competitive advantage.
Before the legislation was passed, CFIUS already had authority to levy fines on companies. But the law also gave the agency the authority to impose financial penalties on firms that fail to comply with new mandatory filing requirements.
"We have a substantial degree of latitude and a big stick in terms of the size of the civil monetary penalty that we can impose for a violation," Feddo said.
Still, he said the goal of any penalty would be deterrence, and to ensure companies comply with the agreements they ink with CFIUS to assuage regulators' concerns and sign off on deals.
The agency has so far been cautious about applying fines. It issued its first one acknowledged publicly last year, for US$1 million, to an undisclosed company for violating a mitigation agreement. Such agreements are signed to assuage regulators' concerns and permit a transaction to move forward.
CFIUS has made waves with its reviews, especially of completed transactions. Reuters reported last month that it has launched a national security review of TikTok owner Beijing ByteDance Technology Co's US$1 billion acquisition of U.S. social media app Musical.ly two years ago.