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CFIUS investment review

CFIUS Enforcement Arm Looks for Chinese Involvement in US Tech Startups Via Review of Past Investments

A new enforcement team within the Committee on Foreign Investment in the U.S. is reviewing previous startup investments to determine the possible involvement of Chinese investors in U.S. technology companies and identify potential national security risks, The Wall Street Journal reported Sunday.

The CFIUS enforcement team is collaborating with the FBI to look for tech investments that pose a national security threat by using the bureau’s database of deals involving foreign investors and ranking those transactions based on a threat assessment intelligence agencies provide, according to former government officials and employees.

Sources said some of the preliminary inquiries by the enforcement team have run for months, while others have resulted in formal government investigations. They said they expect to see an increase in fines, divestment orders and other penalties later this year as a result of these investment reviews.

A spokeswoman for President Joe Biden said the administration “will ensure that Cfius evolves into a 21st-century committee and is able to appropriately evaluate new and evolving risks.” 

A senior official at the Department of the Treasury said the number of personnel at the agency working on CFIUS-related matters increased from about 12 in 2018 to approximately 70 employees. The Treasury oversees CFIUS and received $40 million more in its budgets for 2020 and 2021, driving the expansion of the interagency committee.

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