The U.K. government has introduced, as part of the National Security Bill (the “bill”), the Foreign Influence Registration Scheme (“FIRS”) which will, according to a factsheet, “strengthen the integrity of U.K. politics and institutions and protect the country from state threats.” The bill is currently at the report stage before the House of Lords and FIRS has been the subject of considerable attention both by the Lords as well as other stakeholders such as the Law Society.
FIRS introduces two key registration requirements:
- For foreign principals, or those in an arrangement with them, to register political influence activities or arrangements to carry out political influence activities. “Foreign principal” is a term defined “as a foreign power or a foreign body corporate or association established outside of the U.K.”; “foreign power” includes a foreign government or an agency or authority of a foreign government; “those in arrangement with them” means persons directed by foreign principals to carry out political influence activities. This registration requirement (referred to as Primary Tier) will apply when the nature and purpose of the activity meets the definition of a “political influence activity,” identified in the bill as:
- Communications to individuals such as government ministers, Members of Parliament, senior civil servants;
- Communications to the public where it is not reasonably clear from the communication that it is made by or at the direction of the foreign principal; and
- The distribution of money, goods, or services to U.K. persons.
The purpose of the activity must be to influence matters such as a U.K. election or referendum, a government decision, or the proceedings of a U.K. registered political party.
- For specified persons, or those in an arrangement with them, to register their activities or arrangements. This requirement (referred to as Enhanced Tier) will apply in relation to a limited number of foreign powers or entities controlled by foreign powers, for whom an enhanced level of assurance over their U.K. activities is considered necessary to protect the security and interests of the U.K. The Secretary of State can define which entities and persons meet the definition of “specified persons” in regulations and the following are captured by the registration requirements:
- Arrangements between a person and a specified person to carry out activities or to arrange that activities are carried out in the future within the U.K. at the direction of the specified person – the requirement to register here is placed on the person making the arrangement with the specified person; and
- Activities carried out by specified persons – the requirement to register here is placed on the specified person.
Both registration requirements must be met within 10 days of the making of the arrangement and some information will be available to the public online. Failing to register will be an offence punishable by imprisonment, a fine, or both. The government has indicated that information will not be made public where the Secretary of State considers that publication could threaten the interests of national security, put an individual’s safety at risk; or result in the disclosure of commercially sensitive information.
There are exemptions to the registration requirements. According to the government, the obligations in connection with the registration scheme will not affect legal professional privilege or require the disclosure of confidential journalistic material or sources. Exemptions available for both tiers include:
- Individuals acting for a foreign power in their official capacity as employees;
- Individuals who hold diplomatic immunity;
- Family members who are part of the household of members of diplomatic and consular staff;
- Provision of legal services;
- Those providing essential services to a diplomatic mission or consulate e.g., catering or building services; and
- Arrangements to which the U.K. is party.
An exemption applies for domestic and international news publishers specifically in connection with the Primary Tier.
The introduction of a scheme to address individuals acting on behalf of a foreign power was a recommendation in the Intelligence and Security Committee’s landmark Russia Report which drew inspiration from the Foreign Agents Registration Act in the US. FIRS has, according to reports, sparked worries about increased bureaucracy and its possible effect on competitiveness. It remains to be seen how exactly it will operate but some key points for companies are set out below:
- Companies should review their activities and assess whether any of them are captured by the Primary Tier; they should also identify any connection with counterparties that might become specified persons in accordance with the Enhanced Tier.
- In the context of any acquisitions, companies should ensure compliance both with FIRS as well as the other national security-related requirements in U.K. legislation such as the National Security and Investment Act 2021 (“NSIA”) (see Brown Rudnick’s alert on the NSIA here).
For any questions arising out of this briefing, please contact a member of the White Collar Defense, Investigations & Compliance team.