Highlights from the 2024 CFIUS Annual Report

Highlights from the 2024 CFIUS Annual Report

In a move to strengthen national security, the Committee on Foreign Investment in the United States (CFIUS) has expanded its real estate regulations and enforcement capabilities. This expansion, which came into effect in December 2024, empowers CFIUS to review certain real estate transactions near sensitive military and government sites.

The recent regulatory changes add 59 new installations to the list of sensitive sites, bringing the total to 114. These sites are now subject to CFIUS review, as the committee seeks to manage national security risks associated with foreign investment in real estate and data-sensitive sectors.

The expansion builds on earlier reforms under FIRRMA, which gave CFIUS the authority to review non-controlling foreign investments in U.S. businesses related to critical technology, infrastructure, and data. Additionally, FIRRMA expanded the review of real estate transactions near ports, military installations, and government facilities that were previously exempt.

In 2024, six declarations and three notices were filed under CFIUS's real estate regulations. Despite a slight decrease in the number of CFIUS full filings compared to 2023, the number is still lower than the record set in 2022.

China filed the highest number of notices in 2024, accounting for 12% of total notices. However, when reviewing individual, distinct transactions, China is not the top investor. CFIUS's efficiency improvements remain relatively stagnant, with 55% of notices going to a second-stage investigation in 2024.

The expansion of CFIUS's powers also includes increased maximum penalties for CFIUS violations and broadened enforcement powers, including compelling responses to information requests. These changes underscore CFIUS's enhanced powers and its focus on transactions involving foreign investors from adversary countries such as China, while potentially taking a softer approach toward investors from allied countries.

The CFIUS Annual Report to Congress covering calendar year 2024 signals a leveling-out of CFIUS filings following 2022's record high. In 2024, CFIUS required mitigation in substantially fewer transactions compared to 2023 and 2022.

The robust hiring for CFIUS-related roles, particularly amid broader reductions in U.S. government personnel, and the focus on efficiency for 2025, indicate a renewed commitment to CFIUS's mission. Notable hires include Farhad Jalinous, who specializes in International Trade, Mergers & Acquisitions, Foreign Direct Investment (FDI) Reviews, Technology, Financial Institutions, and Taiwan; Grace Hochstatter, who works in FDI Reviews and International Trade; Timothy Sensenig, who is involved in FDI Reviews, Mergers & Acquisitions, Financial Institutions, International Trade, Technology, and Life Sciences and Healthcare; David Jividen, an expert in FDI Reviews and National Security; Laura Black, who works in International Trade and Taiwan; Ryan Brady, who focuses on International Trade, Technology, Life Sciences and Healthcare, National Security, and Private Capital; and Wes Hutson, an International Trade specialist.

In a significant move, President Biden issued an Executive Order for the divestment of a cryptocurrency mining facility located near a strategic military installation in 2024, marking the first Presidential divestment order under the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA) real estate jurisdiction.

The service areas of the firm include FDI Reviews, the United States, and North America. These changes underscore CFIUS's commitment to protecting national security in the face of increasing foreign investment.

1. The expanded CFIUS regulations now include partner sites for international counsel and legal associates for data-sensitive sectors, such as technology and corporate practice.
2. As a result, whitecase.com is strengthening its compliance team to handle the influx of whitecase involving real estate acquisitions near sensitive military sites.
3. The regulatory changes have led to an increase in the number of CFIUS filings, with 6 declarations and 3 notices filed in 2024 alone.
4. China has been the most active investor in these sensitive areas, accounting for 12% of total notices in 2024.
5. Despite China's high number of notices, CFIUS is taking a softer approach towards investors from allied countries.
6. Notable hires at CFIUS include experts in International Trade, Mergers & Acquisitions, Foreign Direct Investment (FDI) Reviews, Technology, Financial Institutions, and Life Sciences and Healthcare.
7. In a significant move, President Biden issued an Executive Order for the divestment of a cryptocurrency mining facility, the first under FIRRMA's real estate jurisdiction.
8. The firm's services now extend to FDI Reviews, with a focus on the United States and North America.
9. These changes highlight CFIUS's commitment to ensuring compliance and regulatory oversight in the face of increasing foreign investment, particularly in sectors involving critical technology and infrastructure.

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