$200,000 for a $92,478 stake

The US Treasury has issued its first civil penalty under the Outbound Investment Security Program, the rules that govern American investment in Chinese artificial intelligence, semiconductor and quantum computing companies. Amidi LLC was fined $200,000 for failing to notify Treasury of an investment by an entity it controls in a Chinese embodied AI company, the department said in a statement on Wednesday. The penalty was issued in July and announced this week.

The deal was small. On 19 April 2025 Amidi's subsidiary, a Chinese fund, invested approximately $92,478 in Shanghai Qiongche Intelligent Technology, which does business as Noematrix, a private company that develops artificial intelligence, robotics and embodied intelligence, Treasury said. Amidi is also the parent of the organisation that does business as Plug and Play Tech Center. By our arithmetic, the penalty is about 2.2 times the investment, which was made 107 days after the programme took effect on 2 January 2025.

The programme does two things. It prohibits some investments by US persons in companies in or connected to China, Hong Kong and Macau that work in the three sectors, and it requires Treasury to be notified of others. The notifiable deals are those that may be allowed because they fall under computing-power thresholds and are not intended for military or surveillance use, but still involve the sensitive technologies, Kharon explained. The obligation reaches offshore subsidiaries: a US person must notify Treasury of any transaction by a controlled foreign entity that would be notifiable if a US person did it, and must take all reasonable steps to stop such entities from making prohibited ones. Amidi was penalised for the notification failure, not for a banned deal.

"Today's penalty announcement under the Outbound Investment Security Program underscores Treasury's commitment to safeguarding U.S. national security through robust investment security measures that preserve America's technological leadership and advance President Trump's America First Investment Policy," said Scott Bessent, the Treasury secretary. "The Outbound Investment Security Program is an important tool aimed at addressing the advancement of key technologies by countries of concern that could pose risks to U.S. national security," said Christopher Pilkerton, the assistant secretary for investment security. "We will continue to ensure that investors comply with the requirements established under the program."

Treasury said it identified the transaction as part of its regular and ongoing compliance and market monitoring. The company on the other side of it has ties Washington watches. Noematrix's website describes it as a cooperative partner of Huawei, and it has partnered with Shanghai Jiao Tong University, which the US added in July to its so-called 1286 list for its military ties, Kharon reported. Treasury's statement did not mention either relationship.

In deciding whether to bring a case, Treasury says it weighs the facts and circumstances of the conduct, including the aggravating and mitigating factors set out in its enforcement guidance. The first case it has chosen to publicise involves a five-figure stake. The statement also invited tips about possible violations, giving an email address for them. That follows a pattern Komposite has described in export controls, where policy is increasingly made in enforcement actions rather than in new rules.

The programme's reach is about to widen. Congress passed the Comprehensive Outbound Investment National Security Act, known as COINS, on 18 December 2025, and it will expand the programme to investments in further countries and technology sectors, Treasury said. The act does not take effect until Treasury completes implementing regulations, which are due no later than 450 days after passage, or 13 March 2027, according to Thompson Hine, the law firm. It adds Cuba, Iran, North Korea, Russia and Venezuela under the Maduro regime to China, Hong Kong and Macau, and adds hypersonic systems, high-performance computing and supercomputing to the covered technologies.

For funds with China-based vehicles, the lesson of the first case is about paperwork as much as policy. The obligation to notify sits with the US parent even when a local fund makes the investment, and on Treasury's numbers, missing the filing cost more than twice what the stake did. Treasury's statement did not include any comment from Amidi or Plug and Play.