The Committee on Foreign Investment in the United States (CFIUS) Compliance: Strategies for Mitigating Non-Compliance Risks and Enforcement Actions

The Committee on Foreign Investment in the United States (CFIUS) has updated its Enforcement and Penalty Guidelines, indicating a stronger focus on using enforcement authority to punish and prevent non-compliance with CFIUS Agreements. Third-party oversight, such as monitors or auditors, is increasingly employed, especially in cases of heightened risk or public visibility, to assess compliance and investigate suspected non-compliance, according to an article by Ankura.

Ankura is a consulting firm that has conducted various compliance audits and investigations and identified common areas of non-compliance risk, including vague operational definitions of key terms and inadequate mapping of sensitive assets and data.

To mitigate these risks, organizations are advised to establish clear operational definitions of terms, engage stakeholders in their development, and integrate them into policies and procedures. Sensitive asset and data mapping is essential to identify where controlled data resides and to manage access effectively.

The proliferation of sensitive data presents another compliance risk, requiring controls to prevent unauthorized dissemination. Different CFIUS Agreements may require varying levels of control over data access, necessitating tailored approaches. Implementing comprehensive controls is crucial, alongside educating organizational leadership and clarifying accountability for mitigation functions.

Drafting policies, mapping data comprehensively, and implementing controls take time, so interim mitigation measures are necessary. However, as organizations spend more time under CFIUS requirements, regulatory expectations for analytical rigor and control implementation increase. Non-compliance risks enforcement actions, which could damage an organization’s reputation and finances.

CFIUS is increasingly focused on enforcing compliance with its agreements, employing third-party oversight, and targeting common areas of non-compliance such as vague definitions and inadequate data mapping. Organizations must invest in robust compliance measures to mitigate risks and avoid enforcement actions.