Moves to step up efforts to protect sensitive data and technology from foreign adversaries have been signalled by Deputy Attorney General Lisa O Monaco. Scrutiny of foreign investment will also increase, along with the outflow of funds from US investors into foreign companies that may be developing sensitive technologies.

Monaco flagged the moves in a speech given to an audience at a discussion on disruptive technologies, held at London’s Chatham House on February 16.

Hostile powers

She opened up by saying that aggression from hostile foreign powers was increasingly “playing out not only on battlefields but in economic zones and information spaces – in cyberattacks, the vacuuming up of sensitive data and the exploitation of restricted technology”.

Referencing the work traditionally carried out by the Committee on Foreign Investment in the US (CFIUS) to screen foreign investment in the country for national security risks, she said it was rooted in “an era of brick-and-mortar transactions” but that: “Today, the greatest risks come not from investment in our physical assets, but from transactions where datasets, software, and algorithms are the assets.”

“Today, the greatest risks come not from investment in our physical assets, but from transactions where datasets, software, and algorithms are the assets.”

Lisa O Monaco, Deputy Attorney General, US Department of Justice

So a new Disruptive Technology Task Force (DTTF) will link federal prosecutors with agents from the US Commerce Department to investigate and prosecute criminal violations of US export controls. This set of rules has existed in relative obscurity for years, but have taken on added significance as hostile acts involving technology have increased.

Monaco said: “We’ve sharpened the focus of CFIUS on transactions that pose a threat to data security, cybersecurity and the resilience of critical supply chains.

The President also directed CFIUS to consider if foreign investments in a particular industry, made over time, threaten national security or our technological leadership.”

Outbound investment

Outbound investment flows will also come under greater scrutiny. “We must also pay attention to how our adversaries can use private investments in their companies to develop the most sensitive technologies, to fuel their drive for a military and national security edge,” she told the Chatham House audience.

“So, we are exploring how to monitor the flow of private capital in critical sectors and ensure that our own ‘outbound investment’ in dual-use technology doesn’t provide our adversaries with a national security advantage.”

“We must also pay attention to how our adversaries can use private investments in their companies to develop the most sensitive technologies.”

Lisa O Monaco, Deputy Attorney General, US Department of Justice

The creation of the DTTF, she said, “brings together our top experts to attack tomorrow’s national security threats today”. The task force will “use intelligence and data analytics to target illicit actors, enhance public-private partnerships to harden supply chains, and identify early warning of threats to our critical assets, like semiconductors”.

Observers are already predicting an increase in subpoenas and information requests to companies, which means due diligence is more important than ever. Taken alongside the Delaware Chancery Court’s ruling that corporate executives have a duty of oversight, corporate America is being sent a very clear message. Ignorance of your company’s actions and their implications is no defence.