The Treasury Department just released its "first-ever" CFIUS Enforcement and Penalty Guidelines – yet another strong indicator of how the U.S. government is enhancing its scrutiny of foreign investments into the United States.
Among other matters these Guidelines explain how CFIUS will assess violations related to
- failure to submit a mandatory declaration or notice with CFIUS;
- non-compliance with CFIUS mitigation agreements; and
- material misstatements, omissions, or false certifications filed with CFIUS (including information provided during informal consultations).
The Guidelines outline the penalty process, which allows transaction parties to submit a petition for reconsideration. Also, the Guidelines contain a "non-exhaustive" laundry list of aggravating and mitigating factors that CFIUS will consider when determining whether to impose penalties and their amounts.
The Monitoring and Enforcement Office of Treasury's Office of Investment Security has primary responsibility for enforcement. The Guidelines encourage self-disclosures as well as third party tips submitted via the CFIUS tips line.
So far there have been no reported cases where parties have been penalized for failing to submit a mandatory filing with CFIUS. The issuance of these Guidelines is a strong indicator to transaction parties that CFIUS will now be more open to exercising its authority to impose such penalties. According to relevant CFIUS regulations, civil penalties for failure to file a mandatory submission can range up to $250,000 or the value of the deal, whichever is greater.
The Guidelines can be accessed here: CFIUS Enforcement and Penalty Guidelines | U.S. Department of the Treasury
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