On October 7, 2026, the U.S. Department of the Treasury (Treasury) announced that it had issued the first civil monetary penalty under the Outbound Investment Security Program (OISP) in July 2026.[1] Treasury penalized Amidi, LLC (Amidi), a U.S. entity, $200,000 for failing to notify Treasury of an investment by its controlled foreign entity, a Chinese fund, in a Chinese artificial intelligence (AI) and robotics company. Amidi also is the parent entity of Plug and Play Tech Center, a Silicon Valley-based global innovation platform and startup accelerator. Although the underlying investment was modest in dollar terms, the announcement is significant as the first publicly announced enforcement action under the OISP, which took effect on January 2, 2025. 

Under the OISP, U.S. persons are prohibited from engaging in, or required to notify Treasury regarding, a broad range of transactions involving entities engaged in certain activities relating to semiconductors and microelectronics, quantum information technologies, and AI systems in or connected to China, Hong Kong, or Macau. The OISP also imposes requirements on U.S. persons for transactions undertaken by their foreign subsidiaries, or “controlled foreign entities.” In particular, the OISP requires that a U.S. person (i) file a notification with Treasury regarding any transaction by its controlled foreign entity that would be notifiable if engaged in by a U.S. person, and (ii) take all reasonable steps to prohibit and prevent any transaction by its controlled foreign entity that would be prohibited if engaged in by a U.S. person.  We discussed the full scope of and requirements under the OISP in our alert memorandum, available here.

The Violation

According to Treasury, on April 19, 2025, a Chinese fund that is a controlled foreign entity of Amidi invested approximately $92,478 in Shanghai Qiongche Intelligent Technology Company Limited (Noematrix), a Chinese company that develops AI, robotics, and embodied intelligence. Treasury appears to have taken the view that the investment would have required a notification if engaged in by Amidi directly and, accordingly, the controlled foreign entity rules under the OISP required Amidi to file a notification, which Amidi did not do. In July 2026, Treasury imposed a $200,000 civil monetary penalty.

Treasury stated that it identified the transaction through its regular compliance and market monitoring efforts, rather than through a voluntary self-disclosure. In assessing compliance and whether to bring an enforcement action, Treasury evaluates the facts and circumstances of the conduct, including timely self-disclosure and the aggravating and mitigating factors set forth in the OISP Enforcement Overview and Guidance, available here.

Looking Ahead

Although, as noted above, the dollar value of the Noematrix investment was modest, the penalty confirms that Treasury actively monitors outbound investment activity and will pursue enforcement even for small transactions, including transactions by non-U.S. subsidiaries of U.S. entities.

The action also provides a practical market signal in an area where investors have faced uncertainty. Under the OISP, an investment by a U.S. person or its controlled foreign entities in a Chinese company that “develops” an “AI system” intended to be used for the control of robotic systems triggers a notification requirement. The OISP defines “AI system” to include both AI models themselves and any data system, software, hardware, application, tool, or utility that operates in whole or in part using an AI model. A company “develops” an AI system by designing, building, or testing its own model or by making “substantive modifications” to a third-party model (as distinct from merely integrating or fine-tuning a third-party model). For companies at the intersection of AI, robotics, and embodied intelligence, applying that framework has been difficult because these companies often combine third-party AI models with proprietary hardware and software that direct the physical operations of robotic systems. Although Treasury did not detail which features of Noematrix’s business triggered the notification requirement, the enforcement action signals that investments in companies like Noematrix may trigger notification requirements under the OISP.

The action is consistent with the Trump administration’s broader America First Investment Policy (which we discussed in a prior blog post, available here), which directed the U.S. government to use the OISP to restrict additional U.S. outbound investment into China. U.S. investors and their controlled foreign entities should expect continued focus on OISP compliance, particularly as the program expands pursuant to the Comprehensive Outbound Investment National Security Act of 2025 (COINS Act).

Specifically, on December 18, 2025, President Trump signed into law the COINS Act, which largely codifies the core of the current OISP while making certain modifications, including the addition of covered countries (Cuba, Iran, North Korea, Russia, and Venezuela “under the regime of Nicolas Maduro Moros”) and expanding the scope of covered activities to include high-performance computing and supercomputing, and hypersonic systems. The COINS Act requires Treasury to promulgate new or amended regulations by March 13, 2027. We discussed the COINS Act in a prior blog post here.

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Cleary’s Foreign Investment and National Security team continues to monitor developments related to the OISP and the implementation of the COINS Act and is available to provide guidance on addressing outbound investment risk and managing the evolving regulatory landscape.

[1] Press Release, Treasury Announces Enforcement Penalty for Violation of Outbound Program, U.S. Department of the Treasury (Oct. 7, 2026), available here.