Recent political and prosecutorial developments have revealed just how little the public knows about The Foreign Agents Registration Act (“FARA”), which is intended to preserve public and political awareness of information created to influence U.S. public opinion, policy, and legislation, and identify the individuals that are proliferating such information. In this week’s edition of Downrange. we will examine five core components of FARA.
1. Coverage. All U.S. individuals that are agents of a foreign principal must register with the FARA Registration Unit at the U.S. Department of Justice (“DOJ”). Under FARA, “foreign principal” is defined as not only a foreign government, but also a foreign political party, person, or organization outside of the United States, and any entity organized under the laws of a foreign country or with its primary place of business in a foreign country.
“Agents” of foreign principals include all individuals acting in a political or quasi-political capacity. The entities that are presently registered with the DOJ include law firms, consulting firms, investment firms, advocacy organizations, public relations firms, mobile communication entities, and marketing agencies.
2. Registration. Covered individuals and entities must submit to DOJ a “Registration Statement” detailing the registrant’s address and, if applicable, entity information. The Statement must list the name, position, nationality, and address of all foreign officers and directors of the registrant and must describe the scope of the registrant’s activities with the foreign principal(s) and all funds and items of value transferred in relation to such activities. Each Statement must also include physical copies of all agreements – written and oral – with each foreign principal relating to the disclosed relationship.
If the registrant is an entity, it must also provide its organizational documents when filing its Registration Statement, and, if the registrant collected or received money through a fundraising campaign, a summary of such funds must be included as well.
3. Exemptions. Although FARA covers a broad array of activities, some activities are exempt from its registration requirements. Under FARA, individuals and entities engaged in “bona fide religious, scholastic, academic, or scientific” activities or the fine arts and those “not serving a predominantly foreign interest” are exempt. In addition, individuals working with foreign media companies owned by a foreign principal are also exempt. Lastly, individuals engaging in bona fide, private, nonpolitical, purely commercial activities are exempt from FARA’s registration requirements, although the scope of exempt commercial activitienot s is ambiguous.
The burden of establishing a FARA exemption is on the individual/entity that would benefit from such exemption (most often the registrant).
4. Aggressive Enforcement. FARA was first enacted to address the threat of Nazi propaganda, but prosecutions under the Act have been rare. Until recently, DOJ has focused primarily on encouraging compliance with FARA’s disclosure requirements. However, as demonstrated by this year’s prosecution of former Trump campaign chairman Paul Manafort, DOJ has increased its FARA enforcement efforts. Additionally, DOJ has begun implementing FARA enforcement recommendations from the DOJ Office of the Inspector General’s 2016 FARA administration audit. The audit report recommended, among other things, reforming the scope of information reviewed to identify potential or delinquent foreign agents; current exemptions; and the current registration fee structure.
5. Penalties. Failing to register under FARA and to properly label materials disseminated on behalf of a foreign principal can result in criminal penalties. Willful violations of the Act and the provision of misinformation in the Registration Statement is punishable by a fine of up to $10,000 and/or imprisonment for up to five years. Rather than facing public disclosure of a transaction with a foreign principal during a FARA prosecution or enduring criminal penalties, covered individuals and entities should file a FARA Registration Statement in accordance with FARA guidelines. Individuals and entities, whether covered or not under FARA, would also be wise to enforce FARA compliance in their international contracts, as appropriate.
Be sure to check back in with us next week as we examine the filing and labeling requirements for informational materials under FARA.
About the Authors
Downrange authors Jennifer S. Huber, Adam Munitz, and Lidiya Kurin are members of FH+H's International Trade + Transactions Practice. Focusing primarily on the defense, security, and intelligence sectors, Jennifer, Adam, and Lidiya help businesses translate their domestic successes into overseas growth and assist foreign entities with sensitive investments in, and acquisitions of, U.S. businesses.
Additional information regarding their capabilities and previous representations can be found here.