On October 7, 2026, the U.S. Department of the Treasury announced the first civil penalty issued under its Outbound Investment Security Program (OISP): $200,000 against Amidi LLC, the U.S. parent company of the organization known as Plug and Play Tech Center, for failing to notify Treasury of an investment its Chinese fund subsidiary made in a Chinese embodied artificial intelligence company.
The underlying investment was approximately $92,478. U.S. investors, venture funds, accelerators, and corporates with offshore investment vehicles should take note: the notification obligation reaches transactions by a U.S. person’s controlled foreign entities, and Treasury has now penalized a missed filing on a small deal.
Key Takeaways
- Treasury imposed a $200,000 civil penalty on Amidi LLC for failing to notify Treasury of an investment of approximately $92,478 in a Chinese AI and robotics company.
- The investment was made by Amidi’s Chinese fund subsidiary. The OISP regulations require a U.S. person to notify Treasury of a notifiable transaction by its controlled foreign entity.
- The current rules contain no general de minimis threshold for notification, and the existing regulations at 31 CFR Part 850 remain in effect while Treasury implements the COINS Act.
What Happened
On April 19, 2025, a Chinese fund owned by Amidi invested approximately $92,478 in Shanghai Qiongche Intelligent Technology Company Limited (Noematrix), a private Chinese company developing artificial intelligence, robotics, and embodied intelligence. The OISP regulations had taken effect on January 2, 2025.
Under the OISP regulations at 31 CFR Part 850, a U.S. person must notify Treasury of certain transactions involving covered foreign persons in the semiconductors and microelectronics, quantum information technologies, and artificial intelligence sectors, generally within 30 calendar days after the transaction is completed. A U.S. person must also:
- File a notification for any transaction by its controlled foreign entity that would be notifiable if the U.S. person had done it directly; and
- Take all reasonable steps to prohibit and prevent any transaction by its controlled foreign entity that would be prohibited if the U.S. person had done it directly.
No notification was filed for the Noematrix investment. According to Treasury, it identified the transaction through its own regular compliance and market monitoring, not through a voluntary self-disclosure. Treasury issued the penalty in July 2026 and announced it publicly on October 7, 2026.
Treasury’s announcement does not specify which provision of the rules made the transaction notifiable. DTL’s read: the notifiable transaction definition at 31 CFR 850.217(d)(2)(iv) covers a covered foreign person that develops an AI system it intends to be used for the control of robotic systems. That category appears to fit a company developing robotics and embodied intelligence, such as Noematrix.
What This Means for U.S. Investors
1. There is no de minimis safe harbor (yet)
An investment of approximately $92,478 is small by venture capital standards, and it still resulted in a penalty. The current rules contain no general dollar threshold below which notification is excused. The Comprehensive Outbound Investment National Security (COINS) Act, enacted December 18, 2025, as part of the FY2026 National Defense Authorization Act, lists de minimis transactions among its exceptions, to be defined in Treasury’s implementing regulations. Until those regulations are final, we recommend that investors assume no notifiable transaction is too small to file.
2. Controlled foreign entities are squarely in scope
The investing entity was not a U.S. fund. It was a Chinese fund owned by Amidi. This matters for any U.S. sponsor, accelerator, or corporate that operates an RMB-denominated fund, a Hong Kong vehicle, or another offshore entity that makes its own local investments. Under 31 CFR Part 850, the U.S. person is responsible for notifying Treasury of a notifiable transaction by its controlled foreign entity, and Treasury has now enforced that obligation. If your compliance program covers only transactions involving or led by U.S. entities, it has a gap.
3. Missed notifications carry real penalties
This was not a prohibited transaction. It was a notifiable one. Treasury’s first public enforcement action under the program addresses a failure to file. DTL’s read: Treasury treats the notification requirement as a core obligation, not an administrative formality.
The Road Ahead: The COINS Act
The COINS Act gives Treasury 450 days from enactment to issue implementing regulations, a deadline that falls in March 2027. Until new regulations are issued, the existing regulations at 31 CFR Part 850 remain in effect. We recommend that investors use this period to extend OISP screening to offshore vehicles and to conduct a lookback review of transactions completed since January 2, 2025.
How Diaz Trade Law Can Help
Diaz Trade Law advises investors, funds, and companies on outbound investment compliance, CFIUS, export controls, and sanctions. We help clients assess whether a transaction is notifiable or prohibited, design screening procedures for U.S. and offshore entities, conduct lookback reviews, evaluate voluntary self-disclosures, and respond to Treasury inquiries. Contact us to discuss how the OISP and the coming COINS Act regulations affect your investments.
This article is for informational purposes only and does not constitute legal advice.
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