The U.S. Department of the Treasury has proposed updates to the Outbound Investment Security Program to implement the Comprehensive Outbound Investment Security Act. The proposal would require U.S. persons to notify Treasury of certain investments involving covered foreign persons engaged in specified technologies and prohibit transactions involving technologies classified as prohibited. It also adds biotechnology to the five technology sectors identified in the law. The statutory sectors are semiconductors and microelectronics, artificial intelligence systems, quantum information technologies, high-performance computing and supercomputing, and hypersonic systems. The proposal sets out technical specifications to define covered transactions, the scope of covered foreign persons and exceptions. Requirements would apply to U.S. persons, including their controlled foreign entities, with a knowledge standard and expectations for reasonable and diligent inquiry before undertaking a transaction. The proposal also specifies information required in transaction notifications and conduct that would constitute a violation, together with applicable penalties. Treasury is seeking feedback on the proposed scope, definitions, notification requirements and enforcement provisions. Final implementing regulations will follow at a later date and establish an effective date.
U.S. Department of the Treasury proposes expanded outbound investment restrictions covering six technology sectors
The U.S. Department of the Treasury is consulting on updates to its Outbound Investment Security Program that would require notifications for certain technology investments and prohibit others under the Comprehensive Outbound Investment Security Act. The proposal adds biotechnology to five statutory technology sectors and details transaction coverage, exceptions, inquiry expectations and penalties for U.S. persons, including their controlled foreign entities.