CFIUS Needs to Strengthen Processes, GAO Says
The Committee on Foreign Investment in the U.S. should document its processes for reaching consensus on enforcement actions and determining whether to terminate outdated mitigation agreements, the Government Accountability Office said April 18.
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“Documenting such processes would help ensure CFIUS member agencies respond in a timely manner to violations and can focus their resources on mitigation agreements that remain relevant,” the GAO wrote in a 49-page report.
CFIUS negotiates mitigation agreements to address national security risks from foreign investment transactions. The interagency panel is responsible for monitoring and enforcing compliance with the agreements and reviewing them for continued relevance.
However, the absence of a documented process for deciding on enforcement actions “has led to challenges in responding to certain violations,” the GAO said. In addition, requests to terminate mitigation agreements can drag on for months and “burden staff” because it is unclear what evidence is required to justify such decisions.
The GAO report also recommends that the Treasury Department, which chairs CFIUS, document its objectives for a planned doubling of its CFIUS monitoring staffing, and regularly discuss future staffing needs with other CFIUS member agencies.
“Documenting these objectives would allow Treasury to assess whether the increased staffing enables it to meet them,” the GAO said. “Regular staffing coordination would help ensure CFIUS member agencies can effectively monitor and enforce compliance” with a growing number of mitigation agreements.
There were almost 230 active agreements in 2022, up roughly fourfold from a decade earlier. Such agreements have also become more complex, further adding to the workload of CFIUS members.
Treasury wrote in a letter to the GAO included as an apendix to the report that it accepts all of the report’s recommendations.
The GAO said it conducted its CFIUS review at the request of Sen. John Cornyn, R-Texas, the ranking member of the Senate Finance Subcommittee on International Trade, and Sen. Robert Casey, D-Pa., a member of the subcommittee. The senators had no immediate comment on the report.