Treasury's New Strategic Posture on Investment and National Security

As the Treasury Department steps into 2026, it adopts a more aggressive strategy on monitoring both inbound and outbound capital flows. Highlighting this shift are several significant moves: the year's first presidential divestment order, intensified scrutiny on foreign ownership of U.S. agricultural land, and a broader outbound investment regime. These actions collectively reflect a comprehensive national security approach towards cross-border investments, emphasizing the need to integrate Committee on Foreign Investment in the United States (CFIUS) and related reviews into transactions from the beginning.

Agricultural Foreign Investment Disclosure Act (AFIDA) Rulemaking Enhances National Security Measures

Agriculture has emerged as a focal point in national security discussions, with state legislatures proposing or enacting restrictions on land purchases by specific foreign entities. Concerns are growing over foreign control of U.S. lands near military bases and critical infrastructure. In response, on December 29, 2025, the U.S. Department of Agriculture (USDA) introduced a proposed rule under 7 C.F.R. Part 781, Agricultural Foreign Investment Disclosure Act: Revisions to Reporting Requirements. This proposal aims to refine the reporting obligations under AFIDA, enhancing data collection on foreign ownership with more detailed disclosures and broadening definitions to include diverse land interests.

Despite these updates, the core legal obligations under AFIDA remain unchanged. Foreign entities must still report their interests in U.S. agricultural land, which includes land used for forestry and agriculture. The revisions aim to improve data accuracy, especially for lands near sensitive sites, facilitating CFIUS's national security evaluations.

A New Year Brings a Presidential Divestment Order

On January 2, President Trump ordered HieFo Corporation to divest semiconductor assets acquired from EMCORE Corporation. This decision followed a CFIUS review highlighting unresolved national security risks. A previous divestment order in 2025 involved the acquisition of Jupiter Systems by Suirui International Co., Limited, emphasizing the administration’s vigilance on foreign control of sensitive technologies.

Despite HieFo's U.S. incorporation, CFIUS deemed it a foreign entity due to its control by a Chinese citizen. The divestment order included stringent interim measures and illuminated the importance of CFIUS's non-notified enforcement stance. Transactions in sensitive sectors like semiconductors require rigorous pre-closing CFIUS risk assessments to avoid post-closing complications.

Beyond CFIUS: The COINS Act and Outbound Investment Controls

The legislative landscape now includes outbound investment screening, codified by the Comprehensive Outbound Investment National Security Act of 2025 (COINS Act) within the FY 2026 National Defense Authorization Act (NDAA). This act fortifies the Treasury's outbound investment rule found at 31 CFR Part 850 and previously implemented through Executive Order 14105.

The COINS Act introduces expansive changes, potentially widening the scope of "covered foreign persons" to include nations like Cuba and Iran. It emphasizes the importance of U.S. persons not directing investments involving sensitive technologies in "countries of concern." Additionally, the Act authorizes potential expansion to include technologies like hypersonic systems, with Treasury required to develop exceptions and a list of covered foreign entities. These changes underscore the enduring framework of outbound investment regulation.

Together, CFIUS and COINS regulations signify a coordinated effort to monitor capital flows in critical technology areas, enhancing national security strategies.

As companies navigate these regulatory developments, particularly those dealing with foreign investments from sensitive regions or sectors, heightened diligence and compliance will be crucial. The COINS Act indicates a lasting regulatory framework for outbound investments, necessitating careful consideration of regulatory impacts in all foreign-involved transactions.