“Today’s proposed regulations will provide clarity and certainty to investors” about the expanding scope of possible national-security reviews of foreign investment, Treasury Secretary Steven Mnuchin said

U.S. Seeks to Heighten Scrutiny of Foreign Investment in Tech, Infrastructure, Data

par Featured articles licensed from The Wall Street Journal | le 18 September 2019


Regulations are aimed at implementing law sparked by congressional concern about acquisitions by Chinese companies


Katy Stech Ferek – The Wall Street Journal

WASHINGTON—Foreign investors who want to put money into U.S. businesses that rely on sensitive technology, infrastructure and data could face greater national-security scrutiny under proposed rules released Tuesday by the Trump administration.

Treasury Department officials provided a first glimpse of how they would implement Congress’s order last year to expand the scope of national-security reviews of foreign investment deals, including those involving satellites, oil refineries, financial-market systems and drinking water utilities.

“Today’s proposed regulations will provide clarity and certainty to investors regarding CFIUS’s enhanced authorities to address national security risks that arise from certain foreign investments,” Treasury Secretary Steven T. Mnuchin said in a statement.

The proposed regulations explain some of the mechanics of a 2018 law passed by lawmakers concerned that the acquisition of U.S. companies by Chinese interests could pose risks to national security. Under the rule, failing to disclose investments, in some cases, could trigger fines.

The law, passed in August 2018, strengthens the investment scope of the Committee on Foreign Investment in the United States, or Cfius, a Treasury-led panel of government agencies that review foreign investments for national security.

“The Trump administration and Congress worked together in a bipartisan manner,” a senior Treasury official said, “recognizing that some vulnerabilities could be exploited through transactions that fell outside of CFIUS’s traditional control and jurisdiction.”

Treasury officials said they still haven’t determined whether investments from certain countries will get tougher scrutiny than others. They also didn’t explain the fee cost for future requests for national-security reviews from foreign investors.

Tuesday’s proposed rules explained what kind of sensitive data collected by U.S. businesses could trigger a national-security review if a foreign investor becomes involved, narrowing the panel’s review authority to companies with data on more than one million people or on populations that include U.S. military members.


Collected data that could prompt a review includes information such as bank-account statements, mental-health data, details commonly required for a mortgage application, geolocation information and financial data that would indicate someone is experiencing financial hardship.

The panel’s scope stops short of retailers and other businesses that collect credit-card details from consumer purchases under the proposal.

Treasury officials also released a list of U.S. military bases, airports and maritime ports where nearby foreign investment could catch the panel’s scrutiny.

Regulators behind the proposed rules balanced the country’s national-security needs against a global business environment that has built a pipeline of foreign money into U.S. companies. Restricting that flow could scare off foreign money that has been a lifeline to such companies as Silicon Valley startups and biotech enterprises.

Industry officials concerned about the implementation said potential regulatory overreach could overwhelm Treasury staff with new filings. Trump administration officials have said that the law will lead to more than 1,000 filings a year. The staff handled 143 reviews in 2015, the latest year for which data is available.

Since the law, Treasury officials have hired more than two dozen people to prepare for a possible uptick in filings.

“The Committee is clearly evolving to focus on current and next-generation national security concerns, including as they relate U.S. companies’ technological leadership and access to U.S. citizens’ data,” said John Kabealo, a Washington lawyer who has handled more than 100 CFIUS filings since 2011.

Under federal law, Treasury officials were given a Feb. 13, 2020 deadline to implement the rules. Soon, they will begin gathering public comments, due by mid-October, on the proposed rules.