CFIUS Annual Report Released

The Committee on Foreign Investment in the United States (CFIUS), today released its Annual Report to Congress for calendar year 2023.  The Annual Report highlights key indicators of CFIUS’s activities and provides statistics on transactions that CFIUS evaluated in 2023. 

“2023 was a busy year for CFIUS in reviewing transactions for national security risk, monitoring compliance with mitigation agreements, expanding the reach of its jurisdiction, and enforcing against violations of CFIUS legal authorities,” said Assistant Secretary for Investment Security Paul Rosen.  “Last year CFIUS sharpened its review and enforcement toolkit while doubling down on efficiency and due diligence in reviewing and investigating covered transactions.”  

Highlights from 2023 include the following:

• The CFIUS caseload remains significant, with a total of 342 notices and declarations of covered transactions or covered real estate transactions.
• For the three-year period from 2021 through 2023, investors from China filed the highest number of notices, accounting for 13.5 percent (115 notices) of total notices, followed by investors from Singapore with 8.4 percent (72 notices) and Canada with 8.1 percent (69 notices). Japan and the United Kingdom round out the top five with 6.5 percent each (56 notices each).
• In 2023, CFIUS cleared 66 percent of distinct transactions that did not require mitigation measures in either the 30-day assessment period for a declaration or the initial 45-day review period for a notice, an increase from 58 percent in 2022.
• CFIUS assessed or imposed four civil monetary penalties for violations of material provisions of mitigation agreements, double the number of civil monetary penalties that CFIUS had previously issued during its nearly 50-year history.
• CFIUS decreased "withdrawn and refiled"  transactions, which restart the CFIUS review period, from 24 percent to 18 percent of notices (and from 63 to 43 notices as a total number), the first such reduction in five years. 

Compliance & Mitigation Agreements

The Committee is currently monitoring, as of 2023 year-end, 246 mitigation agreements and conditions. In 2023, 20 mitigation agreements and conditions were modified materially, of which 15 were  terminated. All 36 mitigation agreements that were entered into for transactions filed in 2023 have compliance plans as required under subsection (l)(6)(C) of Section 721

In 2023, the Committee undertook several investigations with respect to ensuring compliance with CFIUS’s mandatory filing requirements under 31 C.F.R. § 800.401, some of which resulted in issuing formal determinations of noncompliance.   In 2023, the Committee received its first “voluntary self-disclosure” of a potential failure to file a mandatory declaration.

Non-Notified Transactions

In 2023, Treasury opened non-notified inquiries for 60 transactions and the Committee formally requested filings for 13 transactions. The numbers above do not reflect instances where the parties in receipt of non-notified-related outreach voluntarily filed a declaration or notice prior to receiving a formal request; in 2023, there were three such instances.

Antiboycott Activities:

The study identified 35 M&A transactions in 2023 involving investors from Kuwait, Lebanon, Qatar, and Saudi Arabia, which are countries that comply with any boycott of Israel. The value of the subject M&A transactions with public reported values was $10.3 billion.

Mr. Rosen noted additional developments from 2023 that go beyond the data in the Report including:

• In January 2023, the Committee determined that New Zealand and the United Kingdom constitute excepted foreign states under FIRRMA (adding to the previously made determinations of Australia and Canada);
• In August 2023, Treasury issued a final rule on behalf of the Committee adding eight military installations to the list at appendix A of the Committee’s regulations related to real estate transactions in part 802 to title 31 of the Code of Federal Regulations, the first update to  FIRRMA’s regulations;
• In September 2023, Treasury hosted its second annual CFIUS conference, which provided the Committee an opportunity to engage with stakeholders on the CFIUS process, risk analyses, and other important topics and trends; and
• In December 2023,  The Treasury Secretary and Mexico’s Secretary of Finance and Public Credit signed a Memorandum of Intent (MOI) 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."

The Annual Report is submitted to Congress pursuant to Section 721 of the Defense Production Act of 1950, as amended (50 U.S.C. § 4565).

The full version of the Annual Report is available at https://home.treasury.gov/system/files/206/2023CFIUSAnnualReport.pdf

See our coverage of the 2022 CFIUS Report [here]