On July 23, 2024, the Treasury Department, as the lead agency of the Committee on Foreign Investment in the United States (CFIUS), released a public version of its 2023 Annual Report to Congress regarding foreign direct investment in the United States. The report highlights key indicators of the CFIUS process and provides statistics on transactions that were filed in 2023 and, notably, indicates an uptick in enforcement actions. Assistant Secretary for Investment Security Paul Rosen stated, “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.”

Key highlights from the 2023 report include the following:

  • CFIUS’ caseload remains significant, despite a decrease in filings from 2022, with a total of 342 covered transactions or covered real estate transactions (109 declarations and 233 notices). For declarations, the leading foreign countries involved in such reviews were Canada, Japan, France and the UK. For full notices, the leading foreign countries involved were Canada, China, Germany, Japan, Singapore, South Korea, the UAE, and the UK.
  • CFIUS reviewed 153 covered transactions involving acquisitions of U.S. critical technology companies. Nearly half of these transactions involved either (i) computer and electronic product manufacturing, or (ii) professional, scientific, and technical services.
  • Covered notices fell into the following industry sectors: Finance, Information and Services (50%), Manufacturing (29%), Mining, Utilities, and Construction (11%), and Wholesale/Resale Trade and Transportation (10%).
  • CFIUS cleared 66% 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.
  • CFIUS concluded action after adopting a mitigation agreement or order to resolve national security concerns with respect to 35 notices. Mitigation measures implemented included, but were not limited to: prohibiting or limiting the transfer or sharing of certain intellectual property, trade secrets, assets, or technical information; ensuring that only authorized persons have access to certain technology, systems, facilities, projects, or sensitive information; ensuring that computer networks are segregated; restricting the hiring of certain personnel; establishing a security committee and/or appointing a security officer to ensure compliance; and, requiring prior notification to and approval by relevant U.S. Government parties in connection with any increase in ownership or rights by the foreign acquirer.
  • CFIUS is currently monitoring 246 mitigation agreements, including 36 agreements entered into in 2023. To ensure compliance with these mitigation agreements, CFIUS conducted 43 site visits in 2023. In instances where non-compliance was discovered, the noncompliance was assessed and CFIUS pursued prompt remediation. In doing so, CFIUS 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 referred no transactions for Presidential review.
  • CFIUS improved its efficiency and case processing by decreasing withdrawn and refiled transactions, which restart the CFIUS review period, from 24% to 18% of notices (and from 63 to 43 notices as a total number), the first such reduction in five years. 

Concerning non-notified transactions, the report notes that in 2023 it “identified and considered thousands of potential non-notified transactions” and opened inquiries on 60 such transactions and formally requested filings for 13 transactions. With an increasing workload, CFIUS has increased its number of case officers dedicated to reviews and investigations of covered transactions, and has also worked to enhance its teams dedicated to other functions such as non-notified transactions, monitoring and enforcement, collaboration with international partners and allies, and investment security policy.

If desired for comparison purposes, Thompson Hine’s Update on the CFIUS 2022 Report is available here.