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New regulations, representing the most seismic changes to US foreign investment rules in years, are about to go into effect on Feb. 13, 2020.
Issued by the Treasury Department to expand the scope of the Committee on Foreign Investment in the US (CFIUS), the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA) rules are designed to tackle serious national security issues that have evolved around foreign investments. The new regulations reduce the potential for foreign adversaries to take ownership of and thereby adversely influence companies.
For those involved in regulatory compliance and oversight, it will also mean a lot more work.
To be ready, all stakeholders, including businesses, investors and government agencies, need to prepare and have processes in place to ensure compliance with these robust new requirements.
What Do I Need to Know?
Companies considering making or receiving foreign investments should be acutely aware that:
- CFIUS will shortly implement the full scope of its authority under FIRRMA to include covered investments in critical infrastructure and sensitive personal data, in addition to the previously implemented authority to review covered investments in critical technology.
- CFIUS will shortly implement its authority to review real estate transactions that may impact national security. Covered real estate is identified with geographic specificity to certain listed locations.
- Declarations will soon be mandatory for transactions that involve the acquisition of a substantial interest in a Technology, Infrastructure, and Data (TID) U.S. business by a foreign government.
- Companies wishing for formal conclusion of CFIUS review and companies worried about the national security implications of a proposed transaction should elect to file a full notice rather than a declaration.
- Investors from certain foreign countries may qualify for the “white list” as excepted investors. However, actions taken after the closing of a transaction can disqualify their excepted investor status and subject the transaction to CFIUS review.
The Bottom Line:
Due diligence of both investors and investment targets must expand in depth and detail to ensure compliance with these new CFIUS regulations, which demands a data-driven solution.
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How Exiger’s DDIQ can help:
The Challenge
There is a wealth of publicly available information in today’s expansive data environment that can illuminate risk associated with investments, transactions, and associated third-parties, but it’s often difficult to cut through the noise to find the relevant, risk-related information. Evolving regulatory demands require further scrutiny of transactions and entities involved in the transactions. Consequences of not having the right tools to address the new requirements create mission area risk.
The Solution
The magnitude of this problem necessitates a data-driven solution that can effectively navigate the constantly evolving threat landscape with speed and scale. AI Technology can play a key role in managing the volume of continuous monitoring required to identify unreported foreign affiliations. That’s why the world’s top organizations rely on DDIQ.
Exiger’s DDIQ is an AI-powered automated due diligence solution that identifies, assesses, and continuously monitors risk. DDIQ eliminates the constraints of human-based research. Identifying, classifying, and ranking risk related to investments, transactions, third-parties and counterparties is a critical part of due diligence. DDIQ provides an automated research, diligence, monitoring, and investigation solution based on a cognitive computing platform that accesses thousands of sources such as the open web, corporate registration records, and premium information to automatically, comprehensively, and continuously assess risk.
Exiger’s DDIQ allows for continuous monitoring and provides a complete risk picture
- DDIQ reviews both structured and unstructured publicly available data, while eliminating irrelevant noise.
- This solution enables identification and monitoring of threats at high-speed and in real time by presenting a complete picture of potential problematic foreign ownership, control or influence, in addition to other adverse, legal, and regulatory risk indicators.
- DDIQ automatically illuminates supply chain networks and identifies regulatory red flags, adverse media coverage or information, and legal issues.
Exiger’s DDIQ is the preferred due diligence solution for transparency and accountability
- Exiger’s DDIQ is transparent and fully auditable. Exiger does not offer a ‘black box’ solution with no transparency.
- Based on this feature, DDIQ is the preferred solution for government, law enforcement and financial institutions, corporations, and regulators around the world.
Exiger’s DDIQ is able to automatically identify and translate from both structured and unstructured data sources in 60+ languages in platform
- Without language translation support, the identification, assessment, and categorization of risk indicators is time consuming and costly.
- DDIQ’s automatic translation support for over 60 languages enables immediate identification of risk indicators in foreign websites and other open source and premium source content.
