Industry Experts Discuss Evolving Role of CFIUS

One of the largest impacts felt from the drastic change in mandate and reach of the Committee on Foreign Investment in the U.S. in the last few years is how lawyers, business people and investors are viewing the committee. Speaking at a Capitol Forum webinar on Feb. 4, three CFIUS industry experts highlighted how far more resources are being exerted on CFIUS compliance measures than at any time since its inception. This is largely due to the Foreign Investment Risk Review Modernization Act of 2018, which greatly overhauled CFIUS's responsibilities, including introducing certain mandatory filings for certain foreign transactions (see 1910310053).

Ben Powell, international investment lawyer at WilmerHale, said he noticed far more interest in making sure that all foreign investment was CFIUS-compliant, especially since the introduction of the mandatory filing requirements. These requirements have also raised important questions for businesses as to whether continuing with the other voluntary disclosure processes are worth the effort, Powell said. Powell also pointed out that the actual number of transactions the committee reviews is still fairly small post-FIRRMA, likely around 200 or 300, but that the nature of their reviews has ensured greater focus from compliance officers, particularly in the mergers and acquisitions space.

Another effect of this expanded mandate has been a greater understanding of foreign direct investment issues by CFIUS. Farhad Jalinous, global head of FDI reviews and national security practice at White & Chase, has noticed a greater engagement and awareness of the details of each review before the committee, particularly on issues of semiconductors and investment from China, likely emphasizing the continued importance that China will play to CFIUS in the years to come (see 2101220034). However, Jalinous, Powell and Antonia Tzinova, partner at Holland & Knight, all recognized that CFIUS is just one piece of a larger mechanism in resolving the concerns of U.S. businesses and national security. Powell said that FIRRMA is still very much being implemented, that its ultimate jurisdiction is being deciphered and the main directive now for CFIUS will be to see where exactly FIRRMA implementation takes the organization.