U.S. House Financial Services Committee holds annual CFIUS oversight hearing and urges targeted inbound and outbound investment screening

The U.S. House Financial Services Committee’s National Security, Illicit Finance, and International Financial Institutions Subcommittee held its annual oversight hearing on the Committee on Foreign Investment in the United States (CFIUS), taking testimony from the U.S. Department of the Treasury on CFIUS and the Outbound Investment Security Program administered by Treasury’s Office of Investment Security. In opening remarks, Subcommittee Chair Warren Davidson called for rigorous scrutiny of foreign investments that could undermine U.S. technology, agriculture and energy sectors while keeping the CFIUS process from becoming overly bureaucratic. He highlighted the Known Investor Portal pilot program as a way to streamline reviews for repeat “friendly” investors, and pointed to the COINS Act enacted last month as part of the National Defense Authorization Act, which tasks the Office of Investment Security to build on the outbound program to help prevent U.S. capital from supporting adversaries’ military-industrial bases, particularly the People’s Republic of China. Davidson also referenced the scale of inbound investment, citing more than USD 5.7 trillion in total foreign direct investment and noting that foreign direct investment accounts for 10.1 percent or more of jobs and that foreign firms employ around 25 percent of manufacturing workers. Treasury is expected to write an updated outbound investment rule, which Davidson said should be a clear, streamlined framework that investors can follow without undue compliance burden.