Protecting the U.S. from risky foreign investment

The United States is the world’s most popular place to invest. While the U.S. welcomes foreign investment in U.S. companies, maintaining that open investment environment requires making sure that bad actors don’t use investments to compromise U.S. national security.

The organization responsible for stopping bad investments is called the Committee on Foreign Investment in the United States. CFIUS is a federal interagency group that reviews certain transactions for national security risk.

New Treasury Department rules that went into effect earlier this year strengthened CFIUS’s authority to ensure that foreign investments in the U.S. are safe. These rules give the committee more authority over ­investments in companies that use critical technology, critical infrastructure, and sensitive personal data, as well as some real estate purchases near certain airports, maritime ports and military installations.

The new regulations “maintain our nation’s open investment policy by encouraging investment in American businesses and workers, and by providing clarity and certainty regarding the types of transactions that are covered,” Treasury Secretary Steven T. Mnuchin said in a statement.

The regulations are part of ongoing U.S. efforts to protect sensitive information, infrastructure and critical technology while encouraging investment and trade.

While the United States welcomes legitimate foreign investment, in recent years bad actors have used foreign investments to gain leverage over other countries, either by acquiring companies that hold sensitive data, gaining control over critical infrastructure assets, or obtaining technology with national security applications.

In a speech to the U.S. business community in January, Secretary of State Michael R. Pompeo urged companies and countries to protect themselves and be wary of business deals with ulterior motives.

“We need to make sure American principles aren’t sacrificed for prosperity,” the secretary said in January.

The new CFIUS regulations will help protect American interests and “modernize the investment-review process,” Mnuchin said. They “strengthen our national security.”