Treasury announces first-ever enforcement action for violation of the Outbound Investment Security Program

On October 7, 2026, the U.S. Department of the Treasury (Treasury) announced its first civil penalty under the Outbound Investment Security Program (OISP) restricting U.S. investment in China-linked companies engaged in specified high-tech industries. Treasury fined Amidi, LLC, a U.S. investment company that is the ultimate parent of a China-based investment fund, $200,000 for failing to submit a required notification of the fund’s investment into a Chinese artificial intelligence (AI) company.[1] Treasury discovered the violation independently (i.e., it was not voluntarily disclosed) through its monitoring of market activity. This enforcement action and the accompanying penalty signal that Treasury is actively looking for potential violations of the OISP and is taking such violations seriously, regardless of transaction size or whether the transaction is prohibited or notifiable. Below, we discuss the enforcement actions, the possible reasons the transaction caught Treasury’s attention, and the implications for other corporations.

The enforcement action

As discussed in our previous client updates here and here, the OISP, which went into effect on January 2, 2025, prohibits or requires the notification of investments by U.S. persons and entities they control in a company (a Covered Foreign Person) linked to “countries of concern” (currently China, including Hong Kong and Macau) and engaged in certain activities in specified industries (currently, semiconductors, quantum computing, and the development of AI models, with detailed technical criteria describing the activities covered).[2] Relevant to this transaction, the OISP requires a U.S. person to (a) file a notification with Treasury regarding any transaction by its controlled foreign entity if the transaction would be notifiable if engaged in by a U.S. person and (b) take all reasonable steps to prohibit and prevent transactions by its controlled foreign entity if the transaction would be prohibited if engaged in by a U.S. person.

Amidi is a U.S. company that focuses on investments in real estate development, industrial products/supplies, and technological innovation. On April 19, 2025, Amidi’s subsidiary, a Chinese fund, invested approximately $92,478 in Shanghai Qiongche Intelligent Technology Company Limited (Noematrix). Noematrix is a Chinese company that develops embodied AI with a focus on robotic intelligence. In July 2026, Treasury issued a civil penalty of $200,000 – more than twice the amount of the investment – against Amidi.[3]  Treasury did not explain how it calculated the penalty, but it did refer to previous general guidance on the factors considered in calculating penalties under the OISP.[4]

How did Treasury flag this transaction?

As with the penalty calculation, Treasury has not provided a detailed explanation of why the transaction was a notifiable transaction, but it did make clear that the transaction was identified through its own “regular and ongoing compliance and market monitoring efforts.” As noted above, one of the current industries that the OISP focuses on is AI development, and one of the triggers that makes a transaction notifiable development of an AI system that is intended to be used for the control of robotic systems.[5] Given that Noematrix’s public profile indicates that it develops AI for the purpose of robotic intelligence, including developing force-centered models, an atomic skill library, a core software framework, and an end-to-end toolchain for fully autonomous robot operations,[6] its business appears to fall squarely within the criteria for a notifiable transaction under the OISP.  If Treasury found press or industry reports linking the investing fund to Amidi, a U.S. investment firm, the connection would have been easy to draw.

What this means for U.S. investors

This action makes it clear that Treasury is already actively monitoring transactions and enforcing the OISP, and to the extent there was any de facto “grace period” for implementation, it was quite short. The Noematrix transaction was entered into in April, just three months or so after the effective date of the rule. Treasury also is not waiting for the upcoming revisions to the OISP previewed under the America First Investment Policy and the COINS Act (which are due no later than the spring but could be released at any time).[7]  Finally, although the investment target here appears to have fairly clearly fallen within the scope of notifiable transactions under the OISP, we do not know whether there is any evidence that the Chinese fund was even aware of the OISP and its applicability (or that Amidi was aware of the Chinese fund’s transaction), and the fine was substantial relative to the transaction size.  Although public focus on the OISP may have faded slightly, and to date Treasury guidance has been limited, this case is evidence that the enforcement threat is real.

U.S. investors should continue to closely monitor China-linked investments in the relevant sectors, including investments that may be carried out by controlled affiliates, and ensure that appropriate diligence is undertaken. Further, U.S. investors should ensure that they have appropriate policies and procedures in place to train all relevant personnel and ensure proper documentation and recordkeeping of diligence. Finally, they should continue to monitor the pending OISP revisions, which are likely to result in an expansion of covered sectors as well as potential changes and clarifications to the existing regulations.