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Protecting your interests: UK draft National Security Bill proposes a Foreign Influence Registration Scheme (FIRS)

  • United Kingdom
  • Financial services disputes and investigations

14-11-2022

In our briefing earlier this year, we discussed the Intelligence and Security Committee’s call for new legislation to address the threat of individuals covertly acting on behalf of a foreign power. We considered legislation already in place in the US (FARA) and Australia (FITSA), and the proposals for an equivalent UK scheme.

On 18 October 2022, the Government announced that new legislation would be included via an amendment to the draft National Security Bill (the “Bill”), which is presently at the report stage1, compelling those acting for foreign powers or entities to declare any political influence activities by way of a Foreign Influence Registration Scheme (“FIRS”), and criminalising those who fail to do so.

FIRS will take the form of a public register available on a Government website for political influence activities, and will comprise two tiers, the “Primary Tier” and the “Enhanced Tier”. 

Primary Tier – the foreign influence offences

A person is required to register a foreign influence arrangement (an arrangement whereby a foreign principal2 directs a person to carry out, or arrange to carry out, political influence activities3 in the UK) within 10 days of making the arrangement. Foreign principals (other than foreign powers4) must also register their political influence activities.

Exempt from the Primary Tier registration requirement only are recognised news publishers (domestic and international) and persons making an arrangement with a recognised news publisher for the purpose of publishing news-related material.

The foreign influence offences (which include carrying out unregistered activities, providing false or misleading information and failing to comply with an information notice) carry a penalty on indictment of up to two years imprisonment, fine or both.

Enhanced Tier – the foreign activity offences

A person is required to register a foreign activity arrangement (an arrangement whereby a specified person5 directs a person to carry out, or arrange to be carried out, activities in the UK) within 10 days of making the arrangement. Specified persons (other than foreign powers) must also register their activities in the UK. The key distinction between the Primary and Enhanced Tiers is that the latter will only apply to arrangements with those persons who are specified by the Secretary of State.

There will be no restriction on which states may be named as a specified person under this requirement, in order to enable the UK to respond quickly to emerging threats from any foreign power.

The foreign activity offences (which similarly include carrying out unregistered activities, providing false or misleading information and failing to comply with an information notice) carry a penalty on indictment of up to five years imprisonment, fine or both.

Primary and Enhanced Tier offences

Foreign influence offences

 

Foreign activity offences

Primary Tier – up to 2 years imprisonment

Enhanced Tier – up to 5 years imprisonment

64(8)

Requirement to register foreign influence arrangements

A person who fails to comply commits an offence if the person knows that the arrangement in question is a foreign influence arrangement.

61(10)

Requirement to register foreign activity arrangements

A person who fails to comply commits an offence if the person

(a) knows, or

(b) ought reasonably to know,

that the arrangement in question is a foreign activity arrangement.

66(1)

Offence of carrying out political influence activities pursuant to unregistered foreign influence arrangement

A person commits an offence if

(a) the person carries out a political influence activity in the UK pursuant to a foreign influence arrangement required to be registered under section 64(1),

(b) the arrangement is not registered, and

(c) the person knows that the arrangement is not registered.

 

62(1)

Offence of carrying out activities under an unregistered foreign activity arrangement

A person commits an offence if

(a) the person carries out an activity, or arranges for an activity to be carried out, in the UK pursuant to a foreign activity arrangement required to be registered under section 61(1),

(b) the arrangement is not registered, and

(c) the person knows, or ought reasonably to know, that they are acting under the direction of a specified person.

 

67(3)

Requirement to register political influence activities of foreign principals

A person who fails to register commits an offence if the person knows that the activity in question is not registered.

63(3)

Requirement to register activities of specified persons

A person who fails to register commits an offence if the person

(a) knows, or

(b) ought reasonably to know,

that the activity in question is not registered.

69(6)

Registration information – in relation to sections 61 or 63

A person who fails to inform of a material change to information provided to the Secretary of State commits an offence if, as a result of the failure, the information provided in relation to the registered arrangement or registered activity is misleading, false or deceptive in a material way.

70(7)

Information notices – in relation to section 70(1)

A person commits an offence if, without reasonable excuse, the person fails to comply with an information notice.

72(3)/(4)

Offence of providing false information

A person commits an offence if

(a) the person provides information to the Secretary of State under sections 69 or 70 in connection with a foreign influence arrangement,

(b) the information is false, inaccurate or misleading in a material way, and

(c) the person knows, or ought reasonably to know, that the information is false, inaccurate or misleading in a material way.

(4) A person commits an offence if

(a) the person provides information to the Secretary of State under sections 69 or 70 in connection with a political influence activity which is required to be registered under section 67,

(b) the information is false, inaccurate or misleading in a material way, and

(c) the person knows, or ought reasonably to know, that the information is false, inaccurate or misleading in a material way.

 

72(1)

Offence of providing false information

A person commits an offence if

(a) the person provides information to the Secretary of State under sections 69 or 70 in connection with a foreign activity arrangement, and

(b) the information is false, inaccurate or misleading in a material way.

 

73(2)

Offence of carrying out activities under arrangements tainted by false information

A person commits an offence if

(a) the person carries out a political influence activity in the UK pursuant to a political influence arrangement required to be registered under section 64(1),

(b) information provided to the Secretary of State under sections 69 or 70 in connection with the arrangement, whether by the person or by another person, is false, inaccurate or misleading in a material way, and

(c) the person knows, or ought reasonably to know, that the facts are as mentioned in paragraph (b).

73(1)

Offence of carrying out activities under arrangements tainted by false information

A person commits an offence if

(a) the person carries out an activity in the UK pursuant to a foreign activity arrangement required to be registered under section 61(1),

(b) information provided to the Secretary of State under sections 69 or 70 in connection with the arrangement, whether by the person or by another person, is false, inaccurate or misleading in a material way, and

(c) the person knows, or ought reasonably to know, that the facts are as mentioned in paragraph (b).

 


Exemptions

Exempt from both the foreign influence and foreign activity registration requirements will be UK arrangements (an arrangement or agreement to which the UK, or a person acting for or on behalf of the Crown, is a party) and arrangements relating to the provision of bona fide legal services6. The legal services exemption will be a key point of interest for in-house risk and compliance teams in law firms.

Furthermore the registration requirement for foreign activity arrangements will not apply to the extent the arrangement relates to the provision of goods or services reasonably necessary to support diplomatic missions, consular posts or missions to a UK based international organisation.

Notably there is no exemption for commercial activities within the new legislation.

Practical effect

Royal Assent for the Bill is anticipated to be given in early 2023, however FIRS will require time to implement and as such it is not yet known when the requirements will come into force.

Companies will, however, need to consider the effect of the new legislation on internal compliance and risk assessment processes. Companies should carry out checks to:

  • determine whether any of their activities may be caught within scope of the Primary Tier; and
  • identify any connection with persons or countries who may become specified pursuant to the Enhanced Tier.

Companies must also have consideration to the legislation when carrying out due diligence in M&A transactions or entering into a joint venture, to identify and mitigate any relevant exposure.


  1.  https://bills.parliament.uk/bills/3154
  2. The definition of a “foreign principal” includes a foreign power, body incorporated under non-UK law or an unincorporated association formed under non-UK law. The definition does not include specified persons, bodies incorporated or unincorporated associations formed under the law of the Republic of Ireland, or international organisations.
  3. A “political influence activity” is defined as making a communication to (i) a Minister of the Crown (ii) Member of the House of Parliament (iii) an officer, trustee or agent of a UK registered political party (iv) a candidate at election (v) a senior official or special adviser or (vi) a person exercising functions on behalf of the Crown (and their Scottish or Welsh equivalents); making a public communication that is not reasonably clearly made at the direction of a foreign principal; or distributing money, goods or services to UK persons, where the purpose of that activity is to influence the conduct of an election or referendum, a government decision, the proceedings of the House of Parliament (and their Scottish or Welsh equivalents), the proceedings of a UK registered political party or a Member of House of parliament (or their Scottish or Welsh equivalents).
  4. A “foreign power” is defined as (i) the sovereign or head of a foreign State in their public capacity (ii) a foreign government (or part of) (iii) an agency or authority of a foreign government (or part of) (iv) an authority responsible for administering the affairs of an area within a foreign country or territory (or person exercising those functions) and (v) a governing political party of a foreign government.
  5. A “specified person” is a foreign power or person other than a foreign power specified by the Secretary of State under the regulations. A person other than a foreign power may be specified if the person is not an individual and if there is reasonable belief that person is controlled by a foreign power.
  6.  “Legal services” are given their meaning under Section 8(1) of the Legal Aid, Sentencing and Punishment of Offenders Act 2012, namely the provision of advice on the application of law, advice or assistance in relation to legal proceedings and the prevention, settlement or resolution of legal disputes, and advice or assistance in relation to the enforcement of decisions in legal proceedings or disputes.