Title 50, War and National DefenseRelease 119-110
§4589 Definitions
Title 50 › CHAPTER 55 — DEFENSE PRODUCTION › SUBCHAPTER IV — PROHIBITION AND NOTIFICATION ON INVESTMENTS RELATING TO COVERED NATIONAL SECURITY TRANSACTIONS › § 4589
Summary
Sets out the key definitions the Treasury will use to review certain foreign investments and deals for national security. It names the specific congressional committees involved: in the House, the Committee on Financial Services, the Committee on Foreign Affairs, and the Committee on Appropriations; in the Senate, the Committee on Banking, Housing, and Urban Affairs and the Committee on Appropriations. It lists the countries of concern: the People’s Republic of China (including Hong Kong and Macau), the Republic of Cuba, the Islamic Republic of Iran, the Democratic People’s Republic of Korea, the Russian Federation, and the Bolivarian Republic of Venezuela under the regime of Nicolas Maduro Moros. Explains key terms: a covered foreign person meets one or more rules such as being based in a country of concern, being part of that country’s political leadership (including the Chinese Communist Party Central Committee), being controlled by that country, or being 50% or more owned by it. A covered national security transaction includes types of deals like buying equity, loans that act like equity, joint ventures that will work on banned or sensitive technologies, converting debt to equity, buying or developing assets in a country of concern that create such companies or tech work, directing others to do these things, certain investments in funds, and other transactions that help a country of concern’s military, intelligence, surveillance, or cyber capabilities. There are many exceptions, including very small deals, transactions the Secretary finds in the national interest, many public securities and regulated investment products, routine financial services, intracompany transfers, secondary or ancillary banking and market services, ordinary administrative business, and anything finished before December 18, 2025. Other short definitions: “foreign person” and “party” are set by rules; “knowledge” means actual knowledge, a strong probability, or reason to know; “notifiable technology” and “prohibited technology” each cover five technology areas (semiconductors/microelectronics, artificial intelligence, quantum information, high-performance/supercomputing, and hypersonics) and the Secretary can define technical details or add categories by rule; “Secretary” means the Secretary of the Treasury; “person” covers people, companies, groups, and state or local governments; and “United States person” means U.S. citizens or lawful permanent residents, entities organized under U.S. law (including their foreign branches), or any person in the United States.
Full Legal Text
Title 50, §4589
War and National Defense, Source: USLM XML via OLRC
In this subchapter:
(1)Appropriate congressional committees
Except as provided in section 4584(d) of this title, the term “appropriate congressional committees” means—
(A)the Committee on Financial Services, the Committee on Foreign Affairs, and the Committee on Appropriations of the House of Representatives; and
(B)the Committee on Banking, Housing, and Urban Affairs and the Committee on Appropriations of the Senate.
(2)Country of concern
The term “country of concern” means—
(A)the People’s Republic of China, including the Hong Kong and Macau Special Administrative Regions;
(B)the Republic of Cuba;
(C)the Islamic Republic of Iran;
(D)the Democratic People’s Republic of Korea;
(E)the Russian Federation; and
(F)the Bolivarian Republic of Venezuela under the regime of Nicolas Maduro Moros.
(3)Covered foreign person
Subject to regulations prescribed in accordance with this subchapter, the term “covered foreign person” means a foreign person that—
(A)is incorporated in, has a principal place of business in, or is organized under the laws of a country of concern;
(B)is a member of the Central Committee of the Chinese Communist Party or is a member of the political leadership of a country of concern;
(C)is subject to the direction or control of a country of concern, as defined by regulation, an entity described in subparagraph (A) or (B), or the state or the government of a country of concern (including any political subdivision, agency, or instrumentality thereof); or
(D)is owned in the aggregate, directly or indirectly, 50 percent or more by a country of concern, an entity described in subparagraph (A) or (B), or the state or the government of a country of concern (including any political subdivision, agency, or instrumentality thereof).
(4)Covered national security transaction
(A)In general
Subject to such regulations as may be issued in accordance with this subchapter, the term “covered national security transaction” means a United States person’s direct or indirect—
(i)acquisition of an equity interest or contingent equity interest in a covered foreign person that the United States person knows at the time of the acquisition is a covered foreign person;
(ii)provision of a loan or similar debt financing arrangement to a covered foreign person that the United States person knows at the time of the provision is a covered foreign person, where such debt financing affords or will afford the United States person an interest in profits of the covered foreign person, the right to appoint members of the board of directors (or equivalent) of the covered foreign person, or other comparable financial or governance rights characteristic of an equity investment but not typical of a loan;
(iii)entrance by such United States person into a joint venture, wherever located, that is formed with a person of a country of concern, and that the subject United States person knows at the time of entrance into the joint venture that the joint venture will engage, or plans to engage, in a prohibited technology or notifiable technology;
(iv)conversion of a contingent equity interest (or interest equivalent to a contingent equity interest) or conversion of debt to an equity interest in a covered foreign person;
(v)acquisition, leasing, or other development of operations, land, property, or other assets in a country of concern that the United States person knows at the time of such acquisition, leasing, or other development will result in, or that the United States person plans to result in—
(I)the establishment of a covered foreign person; or
(II)the engagement of a person of a country of concern in a prohibited technology or notifiable technology;
(vi)knowingly directing prohibited transactions or notifiable transactions by foreign persons that the United States person has knowledge at the time of the transaction would constitute an activity described in clause (i), (ii), (iii), (iv), or (v), if engaged in by a United States person;
(vii)acquisition of a limited partner or equivalent interest in a venture capital fund, private equity fund, fund of funds, or other pooled investment fund (in each case where the fund is not a United States person) that the United States person has knowledge at the time of the acquisition likely will invest in a person of a country of concern that is in one of the notifiable technology or prohibited technology sectors, and such fund undertakes a transaction that would be a covered national security transaction if undertaken by a United States person; or
(viii)any other transaction identified by the Secretary, in consultation with the appropriate congressional committees and subject to public notice and comment in accordance with subchapter II of chapter 5 and chapter 7 of title 5, and not subject to the requirements of section 4559 of this title, that is contributing to the military, intelligence, surveillance, or cyber-enabled capabilities of a country of concern.
(B)Exceptions and clarifications
Subject to regulations prescribed in accordance with this subchapter, the term “covered national security transaction” does not include—
(i)any transaction the value of which the Secretary determines is de minimis;
(ii)any category of transactions that the Secretary determines is in the national interest of the United States;
(iii)an investment—
(I)in a security (as defined in section 78c(a) of title 15) that is traded on an exchange or the over-the-counter market in any jurisdiction;
(II)in a security issued by an investment company (as defined in section 80a–3 of title 15) that is registered with the Securities and Exchange Commission, or, if the Secretary chooses to include it as an exception from a covered national security transaction, in a security issued by a non-United States investment company that is registered with a foreign regulator with comparable oversight standards and regulatory jurisdiction to the Securities and Exchange Commission as determined by the Secretary of Treasury;
(III)made as a limited partner or equivalent in a venture capital fund, private equity fund, fund of funds, or other pooled investment fund (other than as described in subclause (II)) where—
(aa)the limited partner or equivalent’s committed capital is not more than a de minimis amount, as determined by the Secretary, aggregated across any investment and co-investment vehicles of the fund; or
(bb)the limited partner or equivalent has secured a binding contractual assurance that its capital in the fund will not be used to engage in a transaction that would be a covered national security transaction if engaged in by a United States person; or
(IV)in a derivative of a security described under subclause (I), (II), or (III);
(iv)any ancillary transaction undertaken by a financial institution (as defined in section 5312 of title 31);
(v)the acquisition by a United States person of the equity or other interest owned or held by a covered foreign person in an entity or assets located outside of a country of concern in which the United States person is acquiring the totality of the interest in the entity held by the covered foreign person;
(vi)an intracompany transfer of funds, as defined in regulations prescribed in accordance with this subchapter, from a United States parent company to a subsidiary located in a country of concern or a transaction that, but for this clause, would be a covered national security transaction between a United States person and its controlled foreign person that supports operations that are not covered national security transactions or that maintains covered national security transactions that the controlled foreign person was engaged in prior to the effective date of the regulations implementing this subchapter;
(vii)a transaction secondary to a covered national security transaction, including—
(I)contractual arrangements (not including contractual arrangements for technology transfer or technical knowledge transfer) or the procurement of material inputs for any covered national security transaction (such as raw materials);
(II)bank lending;
(III)the processing, clearing, or sending of payments by a bank;
(IV)underwriting services including, but not limited to, the temporary acquisition of an equity interest for the sole purpose of facilitating underwriting services;
(V)debt rating services;
(VI)prime brokerage;
(VII)global custody;
(VIII)equity research or analysis; or
(IX)other similar services;
(viii)any ordinary or administrative business transaction as may be defined in such regulations; or
(ix)any transaction completed before December 18, 2025.
(C)Ancillary transaction defined
In this paragraph, the term “ancillary transaction” means, subject to regulations prescribed by the Secretary—
(i)the processing, settling, clearing, or sending of payments and cash transactions;
(ii)underwriting services, including the temporary acquisition of an equity interest for the sole purpose of facilitating underwriting services;
(iii)credit rating services; and
(iv)other services ordinarily incident to and part of the provision of financial services, such as opening deposit accounts, direct custody services, foreign exchange services, remittances services, and safe deposit services.
(5)Foreign person
The term “foreign person” has the meaning given that term in regulations prescribed in accordance with this subchapter.
(6)Knowledge; know
The terms “knowledge” or “know” mean—
(A)actual knowledge that a fact or circumstance exists or is substantially certain to occur;
(B)an awareness of a high probability of a fact or circumstance’s existence or future occurrence; or
(C)reason to know of a fact or circumstance’s existence.
(7)Notifiable technology
(A)In general
Subject to the regulations prescribed in accordance with this subchapter, the term “notifiable technology” means a technology within the following areas not already captured by the technical thresholds specified by any regulations issued in accordance with section 4581 of this title:
(i)Semiconductor technology and microelectronics.
(ii)Artificial intelligence systems.
(iii)Quantum information technologies.
(iv)High-performance computing and supercomputing.
(v)Hypersonic systems.
(B)Updates
The Secretary, in consultation with the appropriate congressional committees and subject to notice and comment in accordance with subchapter II of chapter 5 and chapter 7 of title 5, and not subject to the requirements of section 4559 of this title, may prescribe regulations in accordance with this subchapter to—
(i)define the technical parameters of technologies described in subparagraph (A), as reasonably needed for national security purposes; or
(ii)to add and define categories to the list in subparagraph (A) that enable the military, intelligence, surveillance, or cyber-enabled capabilities of a country of concern.
(8)Party
The term “party”, with respect to a covered national security transaction, has the meaning given that term in regulations prescribed in accordance with this subchapter.
(9)Person
The term “person” includes an individual, corporation, partnership, association, or any other organized group of persons, or legal successor or representative thereof, or any State or local government or agency thereof.
(10)Prohibited technology
(A)In general
Subject to the regulations prescribed in accordance with this subchapter, the term “prohibited technology” means a technology within the following areas, as specified by the regulations:
(i)Advanced semiconductor technology and microelectronics.
(ii)Artificial intelligence systems.
(iii)Quantum information technologies.
(iv)High-performance computing and supercomputing.
(v)Hypersonic systems.
(B)Updates
The Secretary, in consultation with the appropriate congressional committees and subject to notice and comment in accordance with subchapter II of chapter 5 and chapter 7 of title 5, and not subject to the requirements of section 4559 of this title, may prescribe regulations in accordance with this subchapter to—
(i)define the technical parameters of technologies described in subparagraph (A), as reasonably needed for national security purposes; or
(ii)to add and define categories to the list in subparagraph (A) that enable the military, intelligence, surveillance, or cyber-enabled capabilities of a country of concern.
(11)Secretary
Except as otherwise provided, the term “Secretary” means the Secretary of the Treasury.
(12)United States person
The term “United States person” means—
(A)any United States citizen or an alien lawfully admitted for permanent residence to the United States;
(B)an entity organized under the laws of the United States or of any jurisdiction within the United States (including any foreign branch of such an entity); or
(C)any person in the United States.
Reference
Citations & Metadata
Citation
50 U.S.C. § 4589
Title 50, War and National Defense
Last Updated
Sep 23, 2026
Release point: 119-110