The United States government has a policy of openness towards foreign investment, but it also prioritizes protecting national security. The Committee on Foreign Investment in the United States (CFIUS) is an inter-agency committee that reviews transactions involving foreign investment in US businesses. CFIUS is led by the US Department of the Treasury and has the authority to review transactions that result in a foreign person obtaining control over a US business.
CFIUS has jurisdiction over transactions involving the acquisition of control over a US business, as well as investments that result in a foreign person acquiring a non-controlling interest in a US business that involves critical technology, critical infrastructure, or sensitive personal data. The committee also reviews transactions involving real estate located near certain military installations.
CFIUS Review Process
CFIUS derives its authority from section 721 of the Defense Production Act of 1950, as amended by the Foreign Investment and National Security Act of 2007 and the Foreign Investment Risk Review Modernization Act of 2018. The committee’s regulations are located in Chapter VIII of Part 31 of the Code of Federal Regulations.
CFIUS is chaired by the US Department of the Treasury, and its member agencies include the Departments of Justice, Homeland Security, Commerce, Defense, State, and Energy, as well as the Office of the US Trade Representative and the Office of Science and Technology Policy. The President has the authority to issue orders blocking or prohibiting transactions that raise national security concerns.
To assess national security risks, CFIUS examines each transaction through two lenses: potential weaknesses in US defenses and the likelihood of hostile actions by foreign entities. They weigh whether an adversary could gain strategic advantages or undermine critical US operations.
In February 2025, President Trump issued an executive order outlining an ‘America First Investment Policy,’ instructing CFIUS to limit Chinese investments in key US industries like technology and infrastructure. The directive also mandates new safeguards to prevent China-linked buyers from acquiring vital American companies.
Transaction Review
CFIUS has jurisdiction over any acquisition of control over a US business, and there are no transaction thresholds or sectoral limitations. The committee may deem a transaction an acquisition of control based on factors such as the voting nature of the interest and the ability of the investor to decide or influence key corporate decisions.
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For most transactions within the jurisdiction of CFIUS, notifying CFIUS is voluntary. However, two categories of transactions trigger a mandatory CFIUS filing requirement: when a US business produces critical technologies that require a license for export to the country of nationality of the foreign investor, and when an entity at least 49% owned by a foreign government acquires at least 25% of a US business.
Parties have the option to submit a short-form declaration or a long-form notice to CFIUS. The declaration review period runs 30 calendar days, and CFIUS may provide feedback on the filing for the parties to address before formally accepting the filing. The notice review period consists of filing a draft notice, receiving comments from CFIUS, and resubmitting a formal notice, followed by a 45-calendar-day review period.
Information submitted to CFIUS during the filing and review process is deemed confidential and may not be released to the public.
When CFIUS detects national security risks, it often demands mitigation measures through a National Security Agreement (NSA). These conditions can impose heavy compliance burdens and financial costs on the involved parties.
CFIUS’s review process is confidential, and the outcome and reasoning are not generally released to the public, except in cases involving presidential orders. Parties typically choose to abandon transactions where CFIUS determines that the risks to US national security posed by the transaction cannot be effectively mitigated.
Failure to comply with the mandatory notification requirement can result in penalties on both parties up to the value of the transaction. The CFIUS review process can be complex and time-consuming, and parties must carefully consider the potential risks and implications of a transaction before proceeding.
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