Treasury Releases CFIUS Annual Report for 2022

The Department of the Treasury, as Chair of the Committee on Foreign Investment in the United States (CFIUS), released its Annual Report to Congress for calendar year 2022.

The Annual Report highlights key indicators of the CFIUS process and provides statistics on transactions that were filed with the Committee in 2022. 

The Committee’s workload remained high with a record number of filed transactions based on the expanded jurisdiction provided by the Foreign Investment Risk Review Modernization Act (FIRRMA), mandatory filings in certain instances, and more sophisticated processes for identifying non-notified transactions.

“In 2022, the Committee continued to review record numbers of filings.  We sharpened due diligence on investors, tackled sophisticated technologies and national security risks, and launched a number of reviews to assess potential non-compliance with CFIUS regulations,” said Assistant Secretary for Investment Security Paul Rosen. 

Key highlights from 2022 include the following:

• CFIUS reviewed a record number of covered transactions with a total of 440 notices and declarations of covered transactions or covered real estate transactions.   Parties filed using the short-form declaration process in 154 instances and filed through a notice in 286 instances.  The short-form process saw a seven fold increase from the 20 declarations the committee received in 2018.
• The Finance, Information, and Services sector accounted for 52 percent or 149 of the 285 non- real estate CFIUS notices. Within this sector, Professional, Scientific, and Technical Services continued to be the largest subsector, accounting for 44 percent or 66 notices.
• The other top subsectors in 2022 were Telecommunications at 15 percent or 22 notices, followed by Publishing Industries (except Internet) at 13 percent or 20 notices. All other subsectors fell below 10 percent of notices.
• Manufacturing sector accounted for 29 percent or 84 of the 285 non-real estate CFIUS notices. Within Manufacturing, the subsector with the most notices remained Computer and Electronic Product Manufacturing, accounting for 37 percent (31 notices). The next highest subsector was Transportation Equipment Manufacturing, accounting for 17 percent (14 notices).

• The Mining, Utilities, and Construction sector accounted for 13 percent or 36 of the 285 non- real estate CFIUS notices. Within this sector, the Utilities subsector accounted for 67 percent of the sector (24 notices). The Support Activities for Agriculture and Forestry subsector, Oil and Gas Extraction subsector, and Specialty Trade Contractors subsector were the next highest subsectors with 8 percent or three notices each in 2022.
• In 2022, the highest number of Covered Transaction notices were from Singaporean investors, accounting for 12.9 percent (37 notices), followed by Chinese and British investors, accounting for 12.6 percent and 6.3 percent, respectively (36 and 18 notices). For the three-year period from 2020 through 2022, the highest number of notices were from Chinese investors, accounting for 13.0 percent (97 notices), followed by Japanese and Singaporean investors, accounting for 8.1 percent each (60 notices each
• Notices from China, Japan, and Singapore together accounted for approximately 29 percent of notices filed from 2020 to 2022. The distribution of notices from these countries were generally consistent with the overall distribution of notices across the four industry sectors although Canada had the most notices in the Mining, Utilities and Construction sector, consistent with previous years’ reports.
• The Committee enhanced its focus on non-notified transactions to detect and assess national security risks posed by foreign investment.  These matters often required mitigation or other measures to resolve national security risks. One notice was rejected by CFIUS in 2022.
• While there were no presidential actions taken on transactions, a number of transactions were voluntarily abandoned or divested based on CFIUS’s national security determinations.

2022 developments that go beyond the data in the Report include:  

In January 2022, the Committee identified New Zealand as an "excepted foreign state" and determined that Australia and Canada are and will remain excepted foreign states absent further Committee action and notice in the Federal Register;

In June 2022, Treasury hosted the inaugural CFIUS conference, which provided the Committee an opportunity to engage with approximately 500 stakeholders on CFIUS process, risk analyses, and other topics;

In September 2022, President Biden issued an executive order highlighting several national security risk factors that the Committee shall appropriately consider when reviewing transactions;  E.O. 14083, “Ensuring Robust Consideration of Evolving National Security Risks by the Committee on Foreign Investment in the United States.”

While this Executive Order did not change CFIUS authorities, it sharpened the Committee’s focus on two national security factors already codified in Section 721(f) (supply chain security and resiliency and U.S. technological leadership) and highlighted three additional national security factors (aggregate industry investment trends, cybersecurity, and sensitive data)

In October 2022, Treasury released its first ever enforcement and penalty guidelines, which provide the public with information on how the Committee assesses violations of the laws and regulations that govern transaction parties, including potential breaches of CFIUS mitigation agreements