The U.S. Department of the Treasury has imposed its first civil penalty under the Outbound Investment Security Program (OISP): a $200,000 penalty against Amidi, LLC for failing to submit a required notification about an investment made by a controlled foreign entity in a Chinese embodied-AI company. Treasury announced the penalty on October 7, 2026, and says it was imposed in July 2026. The case is a notification failure, not a finding that the investment itself was prohibited. That distinction determines what it means for U.S. investors, fund managers and companies with overseas subsidiaries.
What Treasury announced
Treasury’s October 7, 2026 press release names Amidi, LLC as the penalty recipient. It describes Amidi as the parent entity of the organization that does business as Plug and Play Tech Center. The penalty is against Amidi, LLC itself; Treasury did not describe any penalty against the Plug and Play name or its other activities.
Treasury’s stated violation was that Amidi did not submit a required notification. It did not say the underlying investment was prohibited. Treasury’s own wording is “civil penalty,” and that is the term this article uses.
The transaction behind the penalty
According to Treasury, the case involves the following facts:
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- Investor: a Chinese fund that is a subsidiary of Amidi, LLC.
- Date: April 19, 2025.
- Amount: approximately $92,478.
- Target: Shanghai Qiongche Intelligent Technology Company Limited, also known as Noematrix, which Treasury describes as a private Chinese company developing artificial intelligence, robotics and embodied intelligence.
- Penalty: $200,000, imposed in July 2026 and announced October 7, 2026.
Treasury says it identified the investment through its ongoing compliance and market-monitoring efforts. The announcement does not describe how the notification was missed, and the sources available for this article do not include Amidi’s response.
What the Outbound Investment Security Program covers
OISP implements Executive Order 14105. Treasury says its final rule became effective on January 2, 2025. The program does not ban U.S. investment in China. It targets a narrower set of transactions: certain investments by U.S. persons in entities in or connected to the People’s Republic of China, Hong Kong and Macau, where those entities are engaged in specified activities in three technology areas:
- semiconductors and microelectronics;
- quantum information technologies;
- artificial intelligence.
Within that scope, some covered transactions are prohibited and others must be notified to Treasury. Whether a given investment falls in either category depends on the regulatory definitions, the technology activity, the transaction type and the facts about control and knowledge. The rule is codified at 31 CFR part 850, and that text, together with Treasury’s FAQs, controls any transaction-specific analysis.
Prohibited versus notifiable: why the label matters
The Amidi case turns on the difference between two outcomes under the rule:
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1Clear out junk files and repair common Windows errors2Fix the driver behind crashes, sound loss and screen glitches3Repair Windows errors before they cause bigger problems| Outcome | What it means | What the U.S. person must do |
|---|---|---|
| Prohibited transaction | The rule does not allow a U.S. person to undertake the transaction. | Do not make the investment. |
| Notifiable transaction | The transaction may proceed, but it is subject to a Treasury notification duty. | Notify Treasury as the rule requires. A missed notification is a violation. |
Treasury’s stated violation in the Amidi case falls in the second category. Calling the Noematrix investment “banned” would misstate the record.
How controlled foreign entities and indirect deals are treated
The rule reaches beyond transactions a U.S. person makes directly. Under the controlled-foreign-entity provisions highlighted in Treasury’s announcement, a U.S. person has two duties regarding a foreign entity it controls:
- It must notify Treasury about a transaction by that controlled foreign entity if the transaction would be notifiable if the U.S. person made it directly.
- It must take all reasonable steps to prohibit and prevent the controlled foreign entity from making a transaction that would be prohibited if the U.S. person made it directly.
Treasury’s FAQs also explain that certain indirect transactions may be covered. Coverage depends on how the transaction is structured and on what the U.S. person knew or had reason to know. A foreign fund that a U.S. parent controls is therefore a compliance question for the parent, not only for the fund.
How Treasury decides whether to impose a penalty
A violation does not automatically lead to a civil penalty or another remedy. Treasury’s enforcement guidance describes a fact-specific assessment that may weigh:
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- the harm, or threatened harm, to national security;
- whether the conduct was negligent, grossly negligent, intentional or willful;
- concealment or delay;
- how long the conduct continued;
- cooperation with Treasury;
- voluntary self-disclosure;
- remediation.
Treasury may also draw on information from other parts of the U.S. government, public sources, tips and the filing parties themselves.
Voluntary self-disclosure
Treasury encourages timely voluntary self-disclosure of conduct that may violate the rules. A disclosure must be detailed enough to identify the persons involved. According to the guidance, the following generally will not qualify for mitigating-factor treatment:
- materially incomplete or misleading disclosures;
- compelled disclosures;
- disclosures made after a third party has already reported the conduct.
This describes Treasury’s published guidance, not individualized legal advice.
The penalty ceiling
Treasury’s 2025 inflation-adjustment notice sets the maximum civil penalty at $377,700 per violation or twice the value of the transaction underlying the violation, whichever is greater. Civil-penalty limits are adjusted annually, so a later notice may change this figure. The $200,000 imposed on Amidi is below the $377,700 amount stated in that notice.
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What the first case signals, and what it does not
The clearest signal is that Treasury is enforcing notification duties, including duties that reach controlled foreign entities, and that it is using monitoring to find missed filings. Two limits apply:
- It does not establish that every foreign subsidiary investment is covered. Coverage turns on the technology activity, the transaction type, control and knowledge.
- It does not make every China-related technology investment prohibited or notifiable. Many investments fall outside the three covered sectors or outside the covered-foreign-person definitions.
The expansion Congress has authorized
Treasury’s announcement says Congress passed the Comprehensive Outbound Investment National Security Act of 2025 on December 18, 2025, and that the act will expand OISP to additional countries and technology sectors. The announcement does not list the new countries or sectors and does not give an implementation timeline. Until the statute and later Treasury guidance are checked, no specific expansion should be assumed.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Official statements
Treasury Secretary Scott Bessent said: “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.”
Assistant Secretary of the Treasury for Investment Security Christopher Pilkerton said: “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.” He added: “We will continue to ensure that investors comply with the requirements established under the program.”
These are Treasury’s policy statements about the program. They are not independent findings about the penalty’s effect.
A compliance checklist for U.S. investors and fund managers
The following steps follow from the rule’s structure and Treasury’s enforcement approach. This is general information, not legal advice.
- List every entity you control, including foreign subsidiaries and funds, that makes investments involving China, Hong Kong or Macau.
- For each target, check whether its activity falls within semiconductors and microelectronics, quantum information technologies or artificial intelligence.
- Classify each transaction as prohibited, notifiable or outside the rule, using 31 CFR part 850 and Treasury’s FAQs.
- Record what you knew, or had reason to know, about the transaction’s structure and target.
- If you find a missed notification, evaluate voluntary self-disclosure promptly. The disclosure must be complete and must come before a third party reports the conduct.
Treasury’s own description of the case is the best starting point. Its announcement, program overview, FAQs and enforcement guidance are the primary sources for any specific transaction.
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