The Foreign Agents Registration Act of 1938 (“FARA” or “the Act”) is a controversial disclosure law that aimsto combat covert foreign influence in the United States by promoting transparency with respect to the political, media, and public relations activities of so-called “agents of foreign principals.”¹ FARA’s vague statutory language and history of selective enforcement have made the Act a subject of legal controversy for decades; however, until recently, FARA had largely flown under the radar of the business community. Now, FARA is experiencing a renaissance in public interest, media coverage, and governmental concern due, in large part, to a recent surge in enforcement activity from the U.S. Department of Justice (“DOJ”) over the past half decade. And yet, amid this environment of heightened FARA enforcement, both Congress and DOJ are taking steps to reform the Act and its implementing regulations, respectively.

In recent months, Russia’s invasion of Ukraine and rising geopolitical tensions between the U.S.-led “West,” on one side, and the “no limits” Eurasian partnership between Beijing and Moscow, on the other, have only served to further amplify concerns over malign foreign influence in U.S. democracy. In less than a decade, FARA has gone from easy to overlook to difficult to ignore. Companies, including lobbying firms, media organizations, think tanks, trade associations, U.S. subsidiaries of foreign companies, and others, regularly engage in business activities with foreign parties that could inadvertently trigger FARA’s registration, disclosure, and recordkeeping requirements. Accordingly, companies engaged in international business operations of any kind should keep abreast of the latest developments in FARA reform as well as emerging trends in DOJ’s enforcement of the Act. This article provides an overview of FARA, surveys high-profile examples of recent FARA enforcement, and recounts the latest updates from DOJ and Congress regarding FARA reform.
 

1. What is FARA?

In 1938, Congress enacted FARA in response to growing concerns regarding widespread circulation of Nazi propaganda in the United States. In the decades the followed, FARA’s scope was broadened to encompass not only subversive foreign agents and propagandists, but also lawyers, lobbyists, public relations consultants, and others seeking to influence U.S. policy to the benefit of their particular foreign clients. Former Assistant Attorney General (“AAG”) for National Security John C. Demers described FARA’s purpose as “protect[ing] the integrity of American democracy by combatting covert foreign government influence in our political process.”² FARA aims to reduce secret foreign influence by increasing transparency of representations by individuals or groups on behalf of foreign interests – not by prohibiting or limiting the ability to make such representations. The Act requires certain entities and individuals acting in the United States on behalf of foreign principals to (i) register as a foreign agent with the U.S. Attorney General within ten days of becoming an agent; (ii) disclose certain information related to their foreign representations, including by publicly filing and conspicuously labeling informational material distributed in the United States; and (iii) maintain written records for inspection by U.S. law enforcement authorities. Importantly, however, the Act also provides numerous exemptions from its registration, disclosure, and recordkeeping requirements.
 

2. FARA Enforcement

The FARA Registration Unit (“FARA Unit”) in the Counterintelligence and Export Control Section of the DOJ’s National Security Division (“NSD”) is responsible for the administration and enforcement of FARA. Since around 2016, FARA has seen a revival in enforcement interest at DOJ as public concerns regarding foreign influence over the U.S. political process have reemerged. In the past, FARA registration and disclosure was seen more as a matter of voluntary compliance, but the days of lax enforcement are now over. In fact, there have been more criminal FARA cases brought in the past five years than in the preceding five decades. According to the DOJ’s website, there have been at least twelve criminal FARA cases brought since 2017, several of which relate to allegations of Russian interference in U.S. elections. Moreover, DOJ demonstrated its renewed willingness to exercise its civil enforcement authority under FARA, which had lain dormant from 1991 until 2019, when it brought two high-profile civil enforcement actions in 2019: the first against a Florida broadcasting company, ending with a court-ordered civil injunction; and the second against a prominent global law firm, ending in a settlement agreement.

Though DOJ is currently in the process of reforming its FARA regulations, it continues to vigorously pursue cases alleging violations of FARA and related statutes. FARA recently made national headlines in connection with a broad investigation by DOJ and FBI into whether retired four star general John R. Allen secretly lobbied on behalf of the government of Qatar, lied to investigators about his involvement, and even withheld information in defiance of a federal subpoena. First reported by Associated Press on June 7, 2022, the news story highlighted an “expanding investigation” into the role of foreign influence sponsored by wealthy Arab states like Saudi Arabia, Qatar, and the United Arab Emirates.³ The federal court filings, which were promptly removed after the story broke, allege General Allen played an important role in altering U.S. foreign policy with respect to Qatar by lobbying “then-National Security Advisor H.R. McMaster to have the Trump administration adopt [a] more Qatar-friendly tone.” General Allen, who served as commander of the NATO International Security Assistance Force and U.S. Forces in Afghanistan from 2011 to 2013, remained highly influential in D.C. policy circles after his retirement, including as president of the Brookings Institute from November 2017 until his resignation just days after the New York Times exposé was published. While the DOJ and FBI are yet to comment on the case against Allen, the story has already inspired proposed legislation (discussed below).

While criminal FARA cases understandably dominate the limelight, DOJ’s policy shift toward viewing FARA as an “enforcement priority” has also manifested in more active and aggressive utilization of civil and administrative tools to counter undisclosed foreign influence. One such case, first reported by the Washington Post on June 8, 2022, is that of Christina Pushaw, a spokeswoman for Florida governor Ron DeSantis, who recently registered as a foreign agent for her previous work from 2018 to 2020 on behalf of the former Georgian President Mikheil Saakashvili, a pro-Western leader and close ally of Ukrainian President Zelenskyy.⁴ While Pushaw’s case did not lead to an enforcement action, it is notable because it demonstrates the FARA Unit’s willingness to investigate past actions of agents on behalf of foreign principals – even those that are historically considered allies of the U.S. – and to send letters of inquiry requesting disclosure of information on relationships with such entities.

On May 17, 2022, DOJ filed a civil enforcement action against hotelier Stephen A. Wynn, alleging Wynn lobbied then President Trump among others on behalf of the People’s Republic of China (“PRC”) and seeking to compel Wynn to register under FARA as an agent of the PRC. According to the DOJ’s complaint for declaratory and injunctive relief, Wynn allegedly acted “at the request of Sun [Lijun], the former Vice Minister for Public Security in the PRC, “and on behalf of the PRC” when he “conveyed to former President Donald J. Trump and his Administration the PRC’s request to remove from the country a PRC national who had sought political asylum in the United States.”⁵

Criminal penalties for a willful violation of FARA generally include a maximum fine of $10,000, up to five years imprisonment, or both.⁶ Certain statutorily specified violations are considered misdemeanors, carrying a penalty of up to six months imprisonment and/or a fine of up to $5,000.⁷ Failure to file a registration statement or supplements thereto is generally considered a continuing offense for as long as such failure exists.⁸ The DOJ can seek injunctive relief to prevent a FARA violation or an order requiring compliance with FARA. The FARA Unit does not currently have the authority to issue civil monetary penalties, but on at least one occasion DOJ has included a payment to the U.S. Treasury in the terms of a settlement resolving liability under FARA.⁹ In addition to these penalties, subjects of a FARA enforcement action often suffer reputational harm from being publicly branded a “foreign agent.” DOJ’s recent shift towards more and tougher FARA enforcement – both criminal and civil – underscores the importance of companies doing business with foreign governments or foreign entities to understand FARA’s registration, disclosure, and recordkeeping requirements as well as DOJ’s expectations with respect to implementing effective FARA compliance programs.
 

3. FARA Reform

Most agree that FARA reform of some kind is long-overdue. Widely regarded as outdated, FARA has been criticized for failing to capture the nature of information dissemination in the modern age of social media. Specifically, terms such as “publicity agent” and “information-service employee,” which may have been appropriate at the time they were conceived, seem out of place in a modern world where all one needs to disseminate information to large audiences is access to an internet browser. Moreover, the language used in many of FARA’s core provisions has been criticized as vague and overbroad, leading to confusion regarding the scope of important requirements and exemptions. The path forward on FARA reform could be paved by DOJ through agency rulemaking amending FARA’s implementing regulations, by Congress through enactment of a law amending the FARA statute, or both. Whatever form it takes, the forthcoming reforms are expected to be the first substantive update to FARA in nearly three decades.

DOJ Reform of FARA Regulations

While criticism of the Act is certainly nothing new, two important documents published in the past six years have largely set the course for DOJ’s forthcoming reforms of the FARA regulations. First, on September 7, 2016, the DOJ’s Office of the Inspector General released a report examining NSD’s enforcement of FARA, which observed a “declining trend” in active FARA registrations from the 1980s until 2016, and ultimately concluded that DOJ lacked a comprehensive FARA enforcement strategy. Second, on July 16, 2021, the American Bar Association’s FARA Task Force published a report identifying issues with FARA and presenting concrete recommendations for reform, some of which would require federal legislation to amend FARA, and others of which could be implemented by DOJ via regulatory action.

ANPRM (Dec. 13, 2021).

On December 13, 2021, the DOJ published an Advanced Notice of Proposed Rulemaking (“ANPRM”), seeking public comments to help inform the DOJ’s decision-making with respect to the contents of its forthcoming NPRM revising the FARA regulations. The ANPRM comment period ended on February 11, 2022, and 29 public comments on the ANPRM were received from law firms, think tanks, media organizations, advocacy groups, and other interested persons. As of the time of this writing, DOJ has still not published its highly anticipated NPRM that would amend the FARA regulations to update various definitions, clarify the scope of certain exemptions, and make other modernizing changes. All interested parties should keep an eye out for potential developments from DOJ regarding future amendments to the FARA regulations.

Legislative Reform of the FARA Statute.

In addition to the DOJ’s ongoing review of its regulations implementing FARA, the FARA statute itself has recently received new congressional attention. On April 8, 2022, the House Committee on the Judiciary’s Subcommittee on the Constitution, Civil Rights, and Civil Liberties held a hearing on “Enhancing the Foreign Agents Registration Act of 1938,” contemplating various legislative proposals to reform the FARA statute itself. On June 16, 2022, federal legislators introduced the bipartisan Fighting Foreign Influence Act, a comprehensive piece of legislation seeking to curb foreign influence in U.S. democracy. The proposed legislation, which has been endorsed by leading anti-corruption watchdog Transparency International U.S., would amend FARA to prohibit any individual from registering under FARA or otherwise serving as an agent of a foreign principal, “if the individual at any time served as a Member of Congress, as a senior political appointee, or as a general or flag officer of the armed forces.”¹⁰
 

4. Conclusion

Covert foreign influence in U.S. democracy has been identified by the Federal Bureau of Investigation and DOJ as a national security priority and FARA is an important part of the response. In the words of former AAG Demers, the DOJ’s approach has recently shifted “from treating FARA as an administrative obligation and regulatory obligation to one that is increasingly an enforcement priority.”¹¹ This paradigm shift has been reflected in a surge in criminal and civil enforcement activity over the past half-decade. But as FARA enforcement has risen, the need for substantive FARA reform has become more pressing. Due to FARA’s notoriously broad scope and vague language, many companies and individuals that conduct business activities in the U.S. with or for foreign individuals and entities could unwittingly be affected by FARA’s registration, reporting, and recordkeeping provisions. Accordingly, many have a stake in FARA reform and should pay attention to related developments from DOJ or Congress.

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If you have questions concerning FARA’s requirements or exemptions or need assistance drafting a comment to DOJ’s forthcoming NPRM, feel free to contact our firm.