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Artificial Intelligence

In August 2018, Congress expanded the authority of the Committee on Foreign Investment in the United States (CFIUS) to review, block or unwind certain transactions involving foreign investment without “control” of key US assets, businesses or technologies. Following the passage of the Foreign Investment Risk Review Modernization Act (FIRRMA), CFIUS acting on authorities granted in FIRRMA issued new regulations under which certain transactions involving “critical technologies” impact the new pilot program industries that targets 27 industries.

Unlike the pre-FIRRMA CFIUS submissions that were technically voluntary, the new pilot program submissions are now required. (See 31 CFR Part 801.) Failure to submit a now required CFIUS Pilot Program submission can carry a maximum civil penalty equal to the value of the underlying transaction. The pilot program went into effect on November 10, 2018.

For transactions covered by the pilot program, which currently covers 27 critical industries, parties must submit a mandatory declaration if a transaction would give a non-US person control over the business or when a foreign person does not even gain “control” but merely makes a particular investment.

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