Foreign Investment Attraction and CFIUS: Can the “Known Investor Program” Make U.S. Investment Screening More Efficient?

Attraction of foreign direct investment (FDI) in support of reindustrialization and technology development has emerged as an economic security priority for the United States. In February 2025, the presidential memorandum on the America First Investment Policy set an ambitious dual goal of accelerating FDI to support U.S. economic growth and innovation, while tightening controls on adversarial capital, specifically from China.

Q1: How can the United States balance foreign investment attraction with investment security?

A1: The Trump administration’s approach has potentially far-reaching implications for the Committee on Foreign Investment in the United States (CFIUS) and its process for screening foreign investment for national security risks. On one hand, the over $5 trillion in foreign investment pledges announced by the White House (some of which remain aspirational) to support U.S. industrialization may be unlikely to materialize if bottlenecked by an inefficient and inconsistent CFIUS review process—a growing perception in the industry highlighted in a January 2026 congressional hearing with Investment Security Assistant Secretary Chris Pilkerton.

On the other hand, FDI flows into the United States and allied countries come with heightened risks of exposure to adversarial interests. Even investment among allies could indirectly grant bad actors access to strategic assets, given the complex network and structure of global investors. For example, CFIUS once flagged a Germany-registered pharmaceutical firm’s proposal to acquire another Germany-based firm because the latter had operations in the United States and the former was a subsidiary of a Chinese investment firm.

To thread the needle, the Department of the Treasury announced the “Known Investor Program” (KIP) in May 2025 to facilitate investment from allied and partner countries by streamlining the review process for repeat filers. The Treasury Department began piloting the KIP in mid-2025 with a small, limited number of foreign investors chosen based on geographic diversity and frequency of filing, and whose identities are confidential. In February 2026, the Treasury Department issued a request for information to gather public comments to “inform the program’s development,” giving stakeholders until March 18, 2026, to share feedback on the KIP and the broader CFIUS process. Assistant Secretary Pilkerton suggested that the pilot will continue through 2026, and a final notice on the KIP’s details is expected from the Treasury Department later this year.

While it is too early to assess the efficacy of the program, this piece reviews the KIP’s goals and design through the perspectives of key stakeholders over the past year and identifies success factors for the KIP and implications for broader CFIUS reform.

Q2: What is CFIUS?

A2: CFIUS is an interagency committee chaired by the Treasury Department that screens investments that “threaten to impair the national security of the United States.” It was established in 1975 by former President Gerald Ford to monitor the effects of foreign investment on U.S. national interests, but its jurisdiction has evolved laws and executive orders amid emerging threats and geopolitical tensions.

The most recent overhaul of CFIUS occurred in 2018 through the Foreign Investment Risk Review Modernization Act, which broadened the committee’s jurisdiction to certain noncontrolling and real estate investments. Subsequent actions include former President Joe Biden’s Executive Order 14083 in 2022, which called for greater focus on supply chain resiliency and advanced technologies, and the Treasury Department’s final rules in 2024 to “sharpen and enhance CFIUS procedures and enforcement authorities” and expand the list of military installations around which CFIUS has real estate jurisdiction.

At a high level, CFIUS reviews three types of transactions: (1) investments that could lead to foreign control of a U.S. business; (2) certain noncontrolling investments in a U.S. business involved in critical technologies, critical infrastructure, or sensitive personal data (TID); and (3) transactions involving real estate that is located near sensitive installations, such as military facilities. CFIUS could also review foreign-to-foreign deals if the target business has operations in the United States.

Notifying CFIUS is largely voluntary but recommended to obtain a “safe harbor” for the deal. This is key because the committee’s jurisdiction applies indefinitely, including to closed deals that bypassed its review and may require ex-post mitigation or divestiture. Filing becomes mandatory, however, for transactions involving foreign governments acquiring a “substantial interest” in TID businesses, or a TID business that produces, designs, or manufactures critical technology that would be subject to export controls.

The CFIUS review process runs through several steps. In the national security review, the committee assesses if the deal presents national security risks that may require CFIUS’s intervention. If risks are present, CFIUS conducts a national security investigation to assess and potentially resolve the risks through mitigation measures; if the risks remain unmitigated, CFIUS refers the transaction with a recommendation to the president, who decides to approve, block, condition, or unwind the transaction. If a deal is cleared through mitigation, the committee also monitors the enforcement of the measures over time.

Although CFIUS’s assessment of a given transaction is confidential, public regulations provide a high-level overview of the committee’s risk-based analysis. That is, a function of (1) the threat posed by the foreign person, (2) the vulnerability that the business creates (e.g., exposure to sensitive data or technology), and (3) the consequences to national security arising from the combination of the first two factors.

Q3: How is the KIP intended to work?

A3: The KIP aims to streamline the CFIUS process for repeat investors by collecting information from eligible foreign investors—or “Known Investor Entities”—in advance of filing. As currently drafted, investors qualify for the KIP if they meet, at a high level, three conditions:

1. frequent filing (e.g., at least three CFIUS-cleared transactions within the past three years and expectation to submit a transaction within the next 12 months);
2. clean record with the committee (e.g., no adverse notice within the previous five years for, say, a misstatement or omission); and
3. limited ties to an adversary country or country on entity lists (e.g., no more than 10 percent interest and no board appointment rights).
    

Eligible investors can disclose documentation upfront—such as ownership structure, management, compliance history, and investment strategies—and submit only limited information in a subsequent filing. Participation in the KIP, however, does not necessarily guarantee a favorable review outcome.

Q4: Do the goals of the KIP match investors’ needs as well as the public interest?

A4: Several stakeholders welcomed the program in their comments, with some viewing it as an opportunity to renovate CFIUS. The opportunity for streamlining is also apt because Japan and the United Arab Emirates, both among the largest foreign investment pledgers, ranked in CFIUS’s top five filing nations for technology-related as well as overall transactions in 2024.

Another reason why the KIP is well timed is that CFIUS’s efficiency has emerged as a defining priority amid geopolitical tensions, rapid technological change, and surging FDI volumes. According to the World Bank, net FDI inflows into the United States have grown from 0.14 percent of GDP since CFIUS’s inception in 1975 to 1.03 percent in 2024. Similarly, the number of investigations conducted by the committee has grown from 67 in 2015 to 116 in 2024.

Today, although 90 percent of reviewed transactions cleared CFIUS in the past five years, the committee continues to struggle to negotiate mitigation measures within its statutory timeline, as suggested by the number of refiled transactions—roughly one quarter of the unique transactions in 2024. Indeed, as the review deadline approaches, parties often buy additional time by withdrawing and refiling the formal notice, which “resets the review clock” and essentially extends CFIUS’s timelines. Given the potential for delays, some practitioners advise companies to plan for the CFIUS process to take five to six months from initial filing to completion—though negotiations for some high-profile deals that had already closed reportedly took years.

The friction point is hard to pin down to any single cause. Whether it is interagency coordination, staffing constraints, or political influences, several factors contribute to delays and uncertainty, which can affect valuations, funding timelines, and business plans. For example, a 2024 report by the Government Accountability Office highlighted the challenges that the continuous monitoring of mitigation measures poses on CFIUS’s finite resources and multiagency coordination.

Q5: Does the KIP’s design align with its goals?

A5: Following the Treasury Department’s request for information in February 2026, several stakeholders shared their feedback on the program’s design. Though generally well-received, the current design of the KIP raised a few issues.

Some investors requested clarity regarding the benefits under the KIP amid concerns that the additional disclosure required under the program may deter participation. For example, if investors have already cleared CFIUS’s threat review in the past or they benefit from good standing, the gains from the KIP may be only at the margins, and participants may weigh those benefits against the burden of collecting extensive documentation for the KIP. Thus, some comments recommend a reduction in filing costs for participants or a presumption of reduced risk for their future transactions.

Even if other participants clear the threat review more rapidly through the KIP, timeliness is not assured. CFIUS would still need to assess the vulnerability factor on a case-specific basis, namely by looking at the criticality of the asset involved in that transaction. Ultimately, participation in the KIP does not guarantee a specific review outcome, and the committee’s case-specific approach remains unchanged.

Some investors recommended tightening the KIP through additional disclosure requirements, network analysis as part of the qualification for the program, and detailed verification of the information submitted by participants. Commenters also emphasized solutions to automate and streamline some of these processes, such as standardized disclosure templates, recognizing existing defense mitigation frameworks, and piloting AI-driven screenings for the KIP and the broader CFIUS.

Definitions under the KIP were another concern. Some investors raised privacy concerns due to the broad scope and sensitivity of KIP-related disclosures, while others asked for greater specificity and clarity regarding eligibility criteria. For example, eligibility paperwork will likely require periodic updates to ascertain that eligibility criteria, such as distance from U.S. adversaries, are maintained. Yet, considering that much of the screening process already entails looking into an investor’s network, it is unclear whether the program meaningfully alleviates the review burden in this regard.

Q6: What are the implications of the KIP for CFIUS more broadly?

A6: To the extent the KIP succeeds in streamlining review of lower-risk transactions, the CFIUS process would be able to focus resources and capacity on higher-risk cases. For such a risk-adjusted approach to fully achieve its potential, two additional factors should be considered:

1. How AI can help enhance the CFIUS process is the subject of active discussion among government and private sector stakeholders. AI has the potential to improve screening of investor networks by scanning large amounts of public and commercial sources to detect links between companies and investors and identify the type of relationship and risks. Mapping these networks typically involves procedures that can require time, money, and resources.
2. Even as efforts to improve operational efficiencies accrue, the CFIUS caseload will likely depend on how it interprets its national security remit in an era of geoeconomic competition. While there is a strong argument for including economic security considerations, there is a risk that the process becomes politicized and runs counter to the goals of FDI attraction to promote reindustrialization. Both the February 2026 request for information and legislative efforts in the previous Congress have reflected an appetite for an economic tilt, though any statutory shift would require a broader debate on how to bound such economic perimeter and ensure CFIUS has the capacity to assess economic—rather than purely security—implications.
    

In conclusion, early indications suggest that the announcement of the KIP sent a positive signal to the investment community, but its long-term viability will depend on the ability to address the design issues raised by stakeholders and assess the program’s efficacy once launched. The KIP’s effort to streamline CFIUS also shines a light on the implications for a broader CFIUS reform centered on clarifying definitions and automating processes.

An inefficient CFIUS is only one of the challenges to the administration’s investment attraction agenda—trade and geopolitical volatility remain looming threats. But streamlining U.S. investment screening into a more scalable process may remove one fewer obstacle toward turning substantial foreign investment pledges into secure capital flows toward U.S. reindustrialization and technology development.

Andrea Leonard Palazzi is an associate fellow with the Economic Security and Technology Department at the Center for Strategic and International Studies in Washington, D.C.

The author would like to thank EST interns Jacob Zimmerman and Sofia Leathers for their valuable research support.