CFIUS Focused on Land Deals, Gaining More Enforcement ‘Teeth,’ Industry Officials Say
A July proposal to add nearly 60 military bases to the jurisdiction of the Committee on Foreign Investment in the U.S. (see 2407090003) shows that sensitive real estate issues are “top of mind” for the committee, said Matt Miller, an executive with data discovery firm HaystackID.
Miller, speaking during a July 24 webinar hosted by the firm, said CFIUS has traditionally been “really more focused on technology and data.” But the committee has fielded criticism from lawmakers in recent months for not doing enough to intervene in sensitive U.S. land purchases by foreign governments, including from China (see 2302070028, 2302070025, 2303010036 and 2401160077).
“When we're looking at real estate transactions around military bases, military installations, airfields, government buildings, the U.S. government has really taken a look to expand the list of areas that should be protected because they weren't specifically named in the past,” Miller said. “I think it's great to see that they are thinking much more broadly about the national security interest overall in all these different areas.”
Miller said the committee's proposed expansion of military bases is “extremely timely” for his team at HaystackID, which is currently providing its services in relation to a purchase of a government building by a Chinese organization. He said the deal is “now coming under review” because there is “controlled, classified information” inside the building.
“Now the ownership of that building could, for example, take over the key cards and walk right in the front door and bypass security,” Miller said.
He added that organizations from China aren’t the only ones coming under CFIUS scrutiny for sensitive purchases of U.S. land. The committee has examined deals involving purchasers from Canada, Germany, France, the U.K. and Singapore, “just to name a few,” he said. “We're not picking on China, but in this particular instance they've taken over a government building.”
Jason Garkey, chief security officer for Momentus Space, briefly touched on another set of proposed CFIUS changes in April designed to expand the committee's enforcement powers, including through higher maximum penalties (see 2404110037). The Treasury Department is looking to raise those penalties from a maximum of $250,000 per violation to $5 million per violation.
The change is “giving a lot more teeth to CFIUS, and it's increasing their authority to operate,” Garkey said.
He said CFIUS is now “looking for ways to say, ‘OK, if somebody does not abide by their agreement, what is considered a current deterrent?’"
He said $250,000 "was not deemed to be a sufficient deterrent.”