National security reviews 2018: A global perspective

A guide to navigating the rules for investing in countries that require national security approval

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Navigating national security reviews worldwide

As governments in various countries tighten their grip on national security reviews of foreign direct investment, the need for better assessment and calibration of the associated regulatory risk in cross-border transactions is greater than ever before

Nowhere is this trend more evident than in the United States, with the August passage of the Foreign Investment Risk Review Modernization Act (FIRRMA), which expanded the range of transactions that are subject to review by the Committee on Foreign Investment in the United States (CFIUS), and the more recent release of a pilot program under FIRRMA that instituted mandatory declarations for a broad range of transactions and put in place penalties—up to the full value of the transaction—for failure to comply. With CFIUS set to clamp down still further in coming months, CFIUS compliance is rapidly moving to the very top of the due diligence list for cross-border transactions involving US businesses.

The US is far from alone. As you will read in the pages that follow, the European Union, United Kingdom, Germany, France, China and other nations are also incrementally ratcheting up their reviews. In the UK, for instance, the government is proposing radical new legislation to allow it to intervene in cases that raise potential national security concerns. The UK government itself estimates that, under the new law, approximately 50 cases a year may end up with some form of remedy to address such concerns. In France, the new PACTE law is likely to strengthen the sanctions mechanism, extend the list of sectors subject to review and introduce some transparency into the process through annual reporting on a no-name basis of reviewed cases.

The pages that follow offer a common-sense guide to investing in major jurisdictions, a snapshot of recent regulatory changes in each, and guidance on making sound investment decisions in a time fraught with regulatory uncertainty.


circuit board

United States

Deals are generally approved, but a new law increases the number and types of deals reviewed.

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satellite dishes


While few deals are challenged in Canada, national security reviews are becoming more common and complex

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aerial view of a river through a city in Western Europe

European Union

Proposed European foreign direct investment regulation— a first step toward harmonized European investment controls

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Helsinki, FInland


Deals are generally not blocked in Finland.

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solar panels


New legislation has been proposed to expand the scope of French national security reviews, especially in the technology sector, and to strengthen the powers of French authorities to impose sanctions

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Frankfurt, Germany


Federal Ministry for Economic Affairs and Energy is enforcing a stricter regime for foreign direct investment reviews

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Milan, Italy


Deals are generally not blocked by the Italian government. However, in connection with the clearance process, conditions may be imposed that can have a significant impact on the investment

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nuclear power plant

Russian Federation

New amendments potentially require foreign investors to disclose information about beneficiaries, beneficial owners and controlling persons as part of pre-clearance

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Laser in a quantum optics lab

United Kingdom

National security interventions have, with one exception, involved defense considerations

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electric plant  transformer


Australia requires a wide variety of investments by foreign businesses to be reviewed and approved before completion

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data center


China is attempting to implement a more structured and comprehensive system to keep a closer eye on economic deals that might have security implications

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Tokyo Station


Japan’s implementation of the 2017 amendments to FEFTA must be watched closely to see whether Japan will adopt a more aggressive stance

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