Treasury Announces First Enforcement Penalty Under the Outbound Investment Security Program for Failure to File a Notification

On October 7, 2026, the U.S. Department of the Treasury (“Treasury”) announced its first civil penalty under the Outbound Investment Security Program (“OISP”), imposing a $200,000 penalty on Amidi, LLC (“Amidi”) for failing to notify Treasury of an investment made by its controlled foreign subsidiary into a private Chinese artificial intelligence company.[1] The enforcement action underscores Treasury’s focus on compliance with the OISP’s notification requirements, including for investments undertaken through foreign subsidiaries controlled by U.S. persons and transactions involving relatively modest amounts.

The enforcement action, together with Congress’s enactment at the end of last year of the Comprehensive Outbound Investment National Security Act of 2025 (“COINS Act”), which provides a specific statutory framework for the OISP and expands its scope, underscores that the outbound investment regime has durable bipartisan support within government and is now an active enforcement priority. That, in turn, highlights the importance of assessing OISP compliance across corporate and investment structures, including foreign subsidiaries and investment vehicles.

Background

The OISP was established pursuant to Executive Order 14105, “Addressing United States Investments in Certain National Security Technologies and Products in Countries of Concern,” issued on August 9, 2023 (“E.O. 14105”). The Executive Order, which was predicated on the International Economic Emergency Powers Act (“IEEPA”), directed Treasury to establish a program prohibiting or requiring notification of certain investments by U.S. persons in entities associated with countries of concern that engage in specified sensitive technologies and activities. The People’s Republic of China, including Hong Kong and Macau, was designated as the sole country of concern under the initial program.

On October 28, 2024, Treasury issued its final rule implementing E.O. 14105, codified at 31 C.F.R. Part 850 (the “Final Rule”), which took effect on January 2, 2025. The Final Rule prohibits or requires notification of certain transactions by U.S. persons involving covered foreign persons engaged in specified activities in three technology sectors: (i) semiconductors and microelectronics, (ii) quantum information technologies, and (iii) artificial intelligence systems. The Final Rule also imposes obligations on U.S. persons for investments undertaken by their controlled foreign entities, including with regard to transactions that would be notifiable if undertaken directly by a U.S. person and requires such persons to take all reasonable steps to prevent transactions that would be prohibited if undertaken directly by a U.S. person.

As the OISP began operating under this regulatory framework, Congress moved to establish a specific statutory foundation to explicitly authorize and expand upon the current framework. On December 18, 2025, Congress enacted the COINS Act as part of the National Defense Authorization Act for Fiscal Year 2026. The COINS Act expands the countries of concern beyond China (including Hong Kong and Macau), to include Russia, Iran, North Korea, Cuba, and Venezuela (under the regime of Nicolás Maduro Moros), as well as the technology sectors subject to prohibition or notification requirements to include high-performance computing, supercomputing, and hypersonic systems. Presently, these expanded restrictions are subject to implementing regulations. Accordingly, until Treasury issues those regulations, the existing Final Rule remains in effect and governs the program.

Enforcement Authority

Under the current OISP regulations in the Final Rule, Treasury may impose civil monetary penalties for violating the regime, refer potential criminal violations to the Department of Justice, and compel divestment of prohibited transactions. Civil penalties may reach the greater of $377,700 per violation or twice the value of the transaction giving rise to the violation.

In assessing penalties and weighing enforcement options, Treasury evaluates the facts and circumstances surrounding the conduct at issue, including the aggravating and mitigating factors set out in Treasury’s Outbound Investment Security Program Enforcement Overview and Guidance (the “Enforcement Guidance”). For example, Treasury may consider the extent of actual or potential harm to U.S. national security; the degree of negligence or willfulness involved; the duration of the conduct; the subject person’s cooperation, voluntary self-disclosure, and remediation efforts; and the adequacy of its compliance program. Treasury expressly encourages timely and complete voluntary self-disclosures and considers both such disclosures and efforts to remediate potential violations in determining an appropriate enforcement response.

Amidi Enforcement Action

In its first-ever enforcement action under the OISP, Treasury imposed a $200,000 civil penalty on Amidi, the parent entity of the organization doing business as Plug and Play Tech Center, for failing to notify Treasury of an investment made by its controlled foreign entity. On April 19, 2025, a Chinese fund controlled by Amidi invested approximately $92,478 in Shanghai Qiongche Intelligent Technology Company Limited (“Noematrix”), a private Chinese company developing artificial intelligence, robotics, and embodied intelligence technologies.

Notably, Treasury highlighted that it identified the transaction through its “regular and ongoing compliance and market monitoring efforts,” rather than through a voluntary self-disclosure or third-party tip. In announcing the penalty, Treasury Secretary Scott Bessent emphasized Treasury’s “commitment to safeguarding U.S. national security through robust investment security measures,” while Assistant Secretary for Investment Security Christopher Pilkerton described the OISP as an important tool for addressing national security risks associated with the advancement of sensitive technologies in countries of concern.

Takeaways

• Significant penalties can arise from relatively small investments. Treasury’s $200,000 civil penalty was more than twice the value of the approximately $92,478 underlying investment, underscoring the potential consequences of failing to comply with the OISP’s notification requirements, even for relatively modest transactions in which the issue was a failure to provide notice (rather than engaging in a prohibited transaction). The Final Rule does not provide a general de minimis threshold for notifiable investments. U.S. persons should therefore ensure that their compliance procedures account for potentially covered transactions regardless of investment size.
• Treasury’s OISP enforcement priorities will likely continue to evolve. Although the $200,000 civil penalty exceeded twice the value of the underlying investment, the total penalty was relatively modest compared to the maximum penalties available under IEEPA. Treasury did not disclose the specific factors that prompted its scrutiny of Amidi’s investment vehicle or explain why it pursued enforcement in this instance, yet noted that it identified this transaction through its own compliance and market monitoring. Given the potential for other unreported transactions, the action leaves open questions about how Treasury identifies and prioritizes potential OISP violations and whether additional circumstances influenced its decision to pursue this particular enforcement action.
• Consider voluntary self-disclosure and remediation of potential violations. Although Treasury did not disclose the specific aggravating or mitigating factors underlying the Amidi penalty, its Enforcement Guidance identifies timely voluntary self-disclosure, cooperation, and remediation as relevant considerations in determining an appropriate enforcement response. U.S. persons that identify potentially unreported or otherwise noncompliant transactions should promptly assess the circumstances, consider appropriate remedial measures, and evaluate whether voluntary self-disclosure to Treasury may be warranted.
• Extend compliance oversight and documentation to controlled foreign entities. The Amidi action underscores the importance of maintaining effective OISP compliance procedures across foreign subsidiaries, offshore funds, and other controlled investment vehicles, rather than limiting review to transactions undertaken directly by U.S. persons. U.S. persons should assess whether their screening and diligence procedures provide sufficient visibility into investments undertaken by controlled foreign entities and maintain documentation supporting their compliance assessments, including the basis for determining whether particular transactions are notifiable or prohibited. Notably, under the current OISP regulations, a U.S. person must take all reasonable steps to prohibit and prevent its controlled foreign entities from engaging in any transaction that would be prohibited if engaged in by a U.S. person. U.S. persons are also prohibited from knowingly directing an otherwise prohibited transaction, and must notify Treasury of any notifiable transaction undertaken by a controlled foreign entity.
• Uncertainty remains regarding the interplay between the COINS Act and IEEPA enforcement authorities. Until Treasury issues regulations implementing the COINS Act, questions remain regarding how it will exercise its enforcement authority under the OISP. In particular, at this time it remains an open question as to whether implementing regulations or future Treasury guidance will clarify the interaction between the COINS Act and IEEPA, including the applicable penalties and Treasury’s approach to pursuing enforcement actions.

Treasury’s first civil penalty under the OISP signals that outbound investment compliance has become an active enforcement priority. With the COINS Act laying the groundwork for an expanded outbound investment regime, U.S. investors and multinational companies should assess their existing compliance programs to ensure they are equipped to address current obligations and adapt to forthcoming changes.

[1] Treasury Announces Enforcement Penalty for Violation of Outbound Program