Treasury Announces First Civil Penalty Under Outbound Investment Security Program

On October 7, 2026, the U.S. Department of the Treasury announced the first civil penalty under its Outbound Investment Security Program (OISP). Treasury imposed a $200,000 penalty on Amidi, LLC in July 2026 for failing to submit a required notification of an investment into a Chinese AI company by Amidi’s controlled foreign entity.

According to Treasury, Amidi’s China-based fund invested approximately $92,478 in Shanghai Qiongche Intelligent Technology Company Limited (Noematrix) on April 19, 2025. Noematrix is a private Chinese company that develops AI, robotics, and embodied intelligence. According to Treasury, it identified the transaction “as part of its regular and ongoing compliance and market monitoring efforts.”

The OISP, which took effect on January 2, 2025, prohibits certain investments and requires notification of others by U.S. persons in entities in or connected to China, including Hong Kong and Macau, that engage in specified activities involving semiconductors and microelectronics, quantum information technologies, or AI.

U.S. persons also must notify Treasury of transactions by their controlled foreign entities that would be notifiable if undertaken by a U.S. person. Separately, they must take all reasonable steps to prohibit and prevent transactions by controlled foreign entities that would be prohibited if undertaken by a U.S. person. The Amidi action illustrates the importance of compliance procedures with respect to investments made by foreign subsidiaries of U.S. persons.

The penalty also demonstrates that notification failures involving relatively small investments can result in significant enforcement exposure: the $200,000 penalty exceeded twice the amount invested. The announcement does not specify which AI notification criterion applied or explain how Treasury calculated the penalty. Detection of the OISP violation, through “regular and ongoing compliance and market monitoring efforts,” also demonstrates Treasury’s motivation to proactively identify, investigate, and penalize non-notified and prohibited transactions.

Investors should review whether their diligence and reporting procedures adequately identify potentially covered transactions, including investments by controlled foreign entities, and assign responsibility for required filings. Where potential violations are identified, investors should promptly assess remediation and whether a voluntary self-disclosure is appropriate. Treasury’s OISP enforcement guidance identifies self-disclosure, cooperation, remediation, and compliance measures among the factors relevant to enforcement decisions.

Treasury’s announcement also highlighted the forthcoming expansion of OISP to additional countries and technology sectors under the Comprehensive Outbound Investment National Security Act of 2025 (COINS Act). Treasury has clarified that the existing OISP rules remain in effect until it issues regulations implementing the COINS Act. Investors should address current compliance obligations while monitoring that rulemaking.