*This guide was originally published in 2018 and we have updated it periodically.
January 31, 2023, Covington Guide
In 1938, Congress enacted the Foreign Agents Registration Act (“FARA”), requiring “foreign agents” to register with the Attorney General. As amended over the years, it applies broadly to anyone who acts on behalf of a “foreign principal” to, among other things, influence U.S. policy or public opinion. Until recently, it was a backwater of American law—and a very still backwater at that, with just seven prosecutions between 1966 and 2016.
That now has changed. Like the once obscure Foreign Corrupt Practices Act, which prosecutors revived from hibernation some years ago, FARA is receiving its close-up. Prosecutors have brought more FARA prosecutions in the last several years than they had pursued in the preceding half century. In-house lawyers have scrambled to bone up on this famously vague criminal statute, at a time when the nation’s tiny bar of experienced FARA lawyers can still hold its meetings in the back of a mini-van.
While cases related to Special Counsel Robert Mueller’s investigation are the most salient examples, the renewed focus on foreign agents actually began prior to the Mueller investigation and has continued long after the Special Counsel closed up shop. A significant uptick in audits of registered foreign agents by the FARA Unit (the Department of Justice office that administers FARA), followed by significant staffing changes in the FARA Unit, and then noticeably more aggressive interpretations of the statute in advisory opinions and informal advice from the FARA Unit, all have signaled a sea change.
In September 2016, DOJ’s Inspector General issued a report suggesting that the Department’s enforcement of FARA was too lax, pointedly noting the rarity of prosecutions, and recounting FBI field agents’ complaints that it was too hard to secure DOJ approval to file FARA charges. The IG’s report recommended that DOJ’s National Security Division adopt a comprehensive FARA enforcement strategy. It is likely that the IG’s lengthy review encouraged line FARA attorneys at DOJ to toughen their posture, even before the IG’s critical report was issued. The report, in turn, created a feedback loop, emboldening DOJ officials to be more aggressive in response to the IG’s criticism.
Below we provide a detailed primer on FARA registration, highlighting the ways in which it is now relevant to a broad cast of characters, including multinational corporations. But first, here are some of the key points to keep in mind:
- FARA is written so broadly that, if read literally, it could potentially require registration even for some routine business activities of law firms, lobbying and public relations firms, consulting firms, nonprofit advocacy groups, charitable organizations, ethnic affinity organizations, regional trade promotion groups, think tanks, universities, media organizations, trade associations, U.S. subsidiaries of foreign companies, and other commercial enterprises.
- There does not need to be a foreign government client.
- There does not need to be a written contract.
- There does not need to be any payment of a fee.
- A mere “request” from a foreign person or entity (such as a foreign government official or, in some circumstances, even a foreign private sector individual or company) for help setting up meetings with U.S. government officials could trigger registration.
- A request from a foreign person or entity to provide advice regarding how best to influence U.S. policy or U.S. public opinion could trigger registration.
- There are exceedingly few cases clarifying FARA’s broadly worded provisions. And, while the DOJ FARA Unit commendably started publishing some of its advisory opinions a few years ago, these short opinions sometimes are light on legal analysis, often are heavily redacted, and can be difficult to apply to other situations. This leaves prosecutors ample room to bring novel test cases, and parties who are new to the statute ample room to misjudge its boundaries.
FARA in a Nutshell
FARA is a complicated, arcane, and loosely worded statute. Whether registration is triggered is highly fact dependent, turning on whether agency exists (as defined by FARA), the nature of the activities conducted by the agent, and whether any of FARA’s amorphous “exemptions” apply.
The statute requires “agents of foreign principals” to register with the DOJ and file both detailed disclosure reports and copies of any “informational materials” that are distributed within the United States. Such materials must bear a stigmatizing disclaimer reflecting that they were prepared by a foreign agent. When FARA registration is required, both individuals acting as agents and their employer must register.
While foreign governments and political parties are well understood to be “foreign principals,” the term also includes any non-U.S. individual, partnership, association, corporation, or “organization.” A foreign parent company of a U.S. subsidiary would be a foreign principal, for example.
To become a “foreign agent,” an individual or entity must engage—within the United States—in certain FARA-triggering activities as an agent of, or “in any other capacity at the order, request, or under the direction or control” of, a foreign principal. Although there is some law clarifying what would constitute acting under the “direction or control” of a foreign principal, the term “request” is very broad and seems to go well beyond traditional principles of agency law. The one court decision that briefly touches on a “request” that is sufficient to trigger FARA registration does little to offer a practical answer. DOJ’s formal response to the 2016 Inspector General’s report provided little additional guidance, although the Department took the position that it looks for evidence of “tasking” by the foreign principal to the agent.
[New] In more recent guidance, the FARA Unit identified six factors that it will consider in evaluating agency: (1) whether those requested to act were identified with specificity by the principal, (2) the specificity of the action requested, (3) whether the request is compensated or coerced, (4) whether the activities align with the person’s own interests, (5) whether the position advocated aligns with the person’s subjective viewpoint, and (6) the nature of the relationship between the person and the foreign principal. The FARA Unit further emphasized that the “circumstances must evidence some level of power by the principal over the agent or some sense of obligation on the part of the agent to achieve the principal’s request.”
So, having a written contract or receiving a payment for services rendered, while not required for FARA registration, are strong evidence of agency and factors that the FARA Unit will consider in assessing whether the activities are undertaken for the foreign principal. But, as the FARA Unit has indicated in its guidance, even without a contract or payment, there are other indicia of agency in light of the breadth of the term “request.”
Assuming that an individual or entity is acting as an “agent” of a foreign principal, the obligation to register under FARA is triggered when the agent conducts, on behalf of the foreign principal, one or more of the following activities within the United States:
- Engaging in “political activities,” a term that encompasses any activity that is intended to, or even “believed” to, influence the U.S. government or any section of the U.S. public regarding: (1) formulating, adopting, or changing the foreign or domestic policies of the United States or (2) the “political or public interests, policies, or relations of a government of a foreign country or a foreign political party.”
- Acting as a “public-relations counsel,” “publicity agent,” “information-service employee,” or “political consultant.”
- Collecting or dispensing money.
- Representing the interests of the foreign principal before an agency or official of the United States Government, generally by making direct contact with government officials.
These triggers for registration are, on their face, extremely broad. And some courts have interpreted them literally. In 2019, for example, a federal district court in Florida held that a company that agreed to broadcast a government-owned news agency’s radio programs was required to register under FARA because it was acting as a “publicity agent.” FARA practitioners nonetheless often assume that some of the triggers cannot mean what they say (e.g., collecting or dispensing any funds of behalf of any foreign principal?). And DOJ itself has often placed a gloss on the FARA registration triggers, reading into them narrowing language that does not appear in the statute.
Based on FARA’s legislative history, DOJ has read the definition of “political activities” into other statutory registration triggers; for example concluding that one could not be acting as a “political consultant” for FARA purposes unless one was also engaging in political activities, as defined in the statute. Indeed, there is some legislative history to support this position, notwithstanding the statute’s plain language which treats “informing or advising” a foreign principal regarding the “domestic or foreign policies of the United States or the political or public interest, policies, or relations of a foreign country or of a foreign political party” as triggering registration. In a 1989 letter to Congress concerning Henry Kissinger’s activities for foreign clients, DOJ advised Congress that Kissinger was not required to register because “the Department has consistently interpreted the term ‘political consultant’…to mean any person who takes steps beyond merely advising the foreign principal, such as arranging meetings with U.S. Government officials on its behalf or accompanying the principal to such meetings.” [New] In a more recent advisory opinion, the FARA Unit reaffirmed that “a ‘political consultant’ would not be required to register as an agent unless he engaged in political activities,” citing the legislative history. The FARA Unit also made clear that if it is known that a foreign principal intends to use the agent’s advice to shape the foreign principal’s own efforts to influence the U.S. Government or U.S. public opinion, then this would be treated as registrable political consulting.
FARA has no de minimis threshold. It can be triggered by even the slightest activity that meets any one of the statutory triggers. A single meeting, for example, with a U.S. official by an executive of a company headquartered outside the United States, or by its U.S. subsidiary on behalf of the foreign parent, might satisfy the “representation” trigger. And the mere act of hosting a conference, distributing a policy report, requesting a meeting, or reaching out to opinion leaders on behalf of a foreign principal could satisfy the “political activities” trigger.
Practitioners have placed great weight on the statutory language specifying that FARA only applies to activities “within the United States.” Here too the FARA Unit recently has seemed inclined to take an extremely broad view of what constitutes activity “within the United States,” suggesting that even a very limited nexus to the United States is enough to trigger the statute’s jurisdiction over related activities outside the United States. Indeed, in one recent advisory opinion, the FARA Unit stated that it did “not concur” with the assertion that registration for FARA-triggering activities would not be required if those engaging in the activities were “physically outside the United States at the time of performance or delivery of the service.” [New] In another opinion, the FARA Unit appeared to treat the creation of a website on behalf of a foreign principal as enough to trigger registration, without addressing whether the activity was “within the United States,” seemingly because the website was published in English and could be accessed in the U.S.
By this point, one might wonder why there are not tens of thousands of FARA registrants (currently there are only about five hundred). Apart from non-compliance, which is common, the main explanation is that even when the registration triggers are satisfied, there are several statutory and regulatory “exemptions” that can be relied upon to exempt a person from registration. Unfortunately, the most widely used exemptions are not well defined, DOJ’s advisory opinions interpreting them remain sparse and somewhat inconsistent, and there is essentially zero case law regarding the scope of the exemptions. The most commonly invoked exemptions are summarized below.
The Commercial Exemption
Probably the most frequently used exemption to FARA’s registration requirement is the so-called “commercial exemption,” which exempts “private and nonpolitical activities in furtherance of the bona fide trade or commerce” of a foreign principal. Implementing regulations indicate that trade and commerce includes the purchase and sale of commodities, services, or property. In 2003 regulations, the Department added a second, regulatory commercial exemption for “political activities” undertaken for a foreign corporation “in furtherance of the bona fide commercial, industrial, or financial operations of the foreign corporation.” There remains, however, considerable uncertainty regarding the outer boundaries of the commercial exemption.
Critically, it does not apply when the activities are directed by, or “directly promote the public or political interests of,” a foreign government or political party. There is little published guidance regarding what would constitute “directly promot[ing]” the public or political interests of a foreign government. Over the last several years, the FARA Unit has appeared to take a more expansive view of this language, treating contacts in the United States about matters that are also important to a foreign government as potentially falling outside the commercial exemption, even where a foreign corporation has a legitimate commercial interest in the same issue. For example, in a recent advisory opinion, the FARA Unit determined that activities aimed at improving a foreign state bank’s suitability for building commercial relationships with U.S. financial institutions directly promotes the interests of a foreign country. [New] In another sweeping opinion, the FARA Unit concluded that tourism promotion on behalf of an “independent, non-governmental body” dedicated to promoting tourism in a foreign country directly promoted the interest of a foreign government and triggered FARA registration. It is difficult to see how the logic of this opinion would not also apply to private sector organizations promoting foreign travel on behalf of a foreign principal. On the other hand, in another opinion, the FARA Unit seemed to interpret the commercial exemption’s “directly promote” language narrowly, placing an emphasis on whether there was direct involvement by the foreign government. Due to the fact-specific nature of these opinions, it is important to carefully analyze the extent to which a foreign government’s public interests would be promoted by political activities in the United States even if the impetus for the activities is the private sector foreign principal’s bona fide commercial objectives.
DOJ regulations also expressly provide that the commercial exemption is available even to state-owned enterprises that are wholly owned by a foreign government. This is significant given the huge number of state-owned enterprises around the world, many of which have business operations in the United States pursuing commercial objectives that are often separate and distinct from the foreign policy objectives of their governmental owners. In recent years, the FARA Unit has seemed uncomfortable with the fact that its regulations expressly allow state-owned enterprises to avail themselves of the commercial exemption. [New] For example, the FARA Unit concluded in a recent advisory opinion that a U.S. public relations firm could not rely on the commercial exemption for work on behalf of a foreign corporation that was partly owned by foreign state-owned enterprises. The FARA Unit reasoned that the corporation’s interests were closely “intertwined” with the foreign government and political party. Nonetheless the regulation is clear and remains in force, and state-owned enterprises that undertake political activities within the U.S. should still be able to rely upon it, though they should consider carefully the interest any foreign government or political party may have in the matter.
The LDA Exemption
When Congress strengthened federal lobbying disclosure requirements in the mid-1990s through the Lobbying Disclosure Act (“LDA”), it simultaneously added a new exemption to FARA that permits an agent of a foreign private sector principal to satisfy any FARA obligation by registering under the LDA, so long as the agent has engaged in at least some lobbying activities. Many entities that would otherwise be foreign agents choose to satisfy FARA, where applicable, by registering and reporting under the LDA, which is generally considered far less burdensome and somewhat less stigmatized.
The LDA exemption is not available to an agent of a foreign government or political party, however. Moreover, even if the agent is engaged by a private entity, DOJ regulations provide that the exemption is not available if “the principal beneficiary” of the work is a foreign government or political party. There is no definition of “principal beneficiary,” and in the recent past the FARA Unit has taken an increasingly broad view of what would make a foreign government the principal beneficiary of actions undertaken by an agent on behalf of a private sector foreign principal. A surprising footnote in a recent advisory opinion, for example, takes the position that “there are situations in which a foreign government or political party may not be the principal beneficiary, but a principal beneficiary of lobbying activities in which the LDA exemption would not apply.” This could have significant implications for U.S subsidiaries of foreign parent corporations. For example, a U.S. subsidiary registered under the LDA may think it has addressed any FARA exposure associated with its foreign parent. But if the subsidiary acts on behalf of its parent with respect to an issue that is of significant interest to a foreign government, there is a risk that the FARA Unit could determine that the LDA exemption does not apply, even where the company has its own genuine and significant commercial interest in the matter.
As noted, an agent who seeks to take advantage of the LDA exemption also has to engage in at least some “lobbying activities” on behalf of its foreign principal. This means, for example, that if the agent is engaged solely to provide public relations advice, political consulting services, or fundraising within the United States, it could not avail itself of the LDA exemption and would have to register under FARA.
Consistent with the trend of strengthening FARA, several Members of Congress have introduced legislation to eliminate the LDA exemption from FARA or to conduct an audit addressing how the exemption is used. Indeed, in the DOJ IG report, FARA Unit staff expressly urged that Congress eliminate the LDA exemption to “once again require those who lobby for foreign commercial interests to register under FARA.” And very recently, DOJ submitted a letter to Congress advocating for the repeal of the LDA exemption.
The Lawyer’s Exemption
FARA also includes a limited exemption for lawyers engaged in the practice of law on behalf of a foreign client. But in recent years the “lawyer’s exemption” has been narrowed considerably. It does not apply to a lawyer’s attempt to influence agency personnel with respect to U.S. government policy matters, or the public interests of a foreign government, except in the course of judicial proceedings; criminal or civil law enforcement inquiries, investigations, or proceedings; and agency proceedings required by statute or regulation to be conducted on the record. For example, the FARA Unit concluded in a recent advisory opinion that a U.S. law firm had an obligation to register under FARA for representing a foreign company in the acquisition of a U.S. company, reasoning that the representation involved “educating U.S. policymakers” about the foreign company’s proposed acquisition of a U.S. company. The intent behind this exemption appears to be to require registration by law firms when they act more as lobbyists, public relations advisors, or political consultants than as legal counselors. But this is a very fine line, requiring careful parsing of the language of the lawyer’s exemption.
[New] The FARA Unit recently revised its guidance on the scope of the lawyers’ exemption, emphasizing that “[t]he scope of the exemption, once triggered, may include an attorney’s activities outside [legal] proceedings so long as those activities do not go beyond the bounds of normal legal representation of a client within the scope of that matter.” While the exact scope of “normal” activities is still amorphous, a recently revised advisory opinion clarified that responding to media inquiries about litigation would typically fall within the scope of the lawyers’ exemption, but a “proactive media engagement . . . more akin to a public relations campaign” would not.
The Academic Exemption
Universities, think tanks, and other scholarly institutions often look to FARA’s “academic exemption” to avoid registration. This exemption applies to persons “solely” engaged in bona fide religious, scholastic, academic, or scientific pursuits or the fine arts. DOJ regulations provide, however, that it does not apply if the person is engaged in “political activities.”
Interestingly, the 2016 IG report noted that the FARA Unit specifically identified think tanks, organizations operating on college or university campuses, and “non-governmental and grass roots organizations” as entities that often claim to be exempt from registration, for which DOJ lacks sufficient investigative tools. In addition to asserting that they are not acting as agents under foreign direction or control, some of these entities look to the academic exemption as a defense.
[NEW] More recently, the FARA Unit has issued a slew of advisory opinions scrutinizing the activity of nonprofits. In one opinion, the FARA Unit interpreted the exemption narrowly, concluding that a representative of a private foreign university was required to register under FARA for “conduct[ing] outreach and advocacy” to U.S. government officials “to promote [the foreign university’s] mission, goals, and financial priorities.” The FARA Unit reasoned that the outreach involved advocacy to obtain grants from the U.S. government and was, therefore, not only in furtherance of the scholastic and academic pursuits of the University. In another opinion, the FARA Unit concluded that a not-for-profit charitable organization established by a foreign government to increase “friendship and goodwill” between a foreign country and “the rest of the world” through exchange programs was required to register. The FARA Unit reasoned that the activities would influence the U.S. public to view the foreign government “in a positive light” and “ultimately foster beneficial U.S. foreign policies” with respect to the foreign country. Because the organization was engaged in political activities, the academic exemption did not apply.
Given FARA’s breadth and ambiguity, and DOJ’s recent shift to interpreting the exemptions more narrowly, lawyers and compliance personnel should be attuned to the following common traps:
- Requests received by a U.S. company from a foreign business partner or a foreign affiliate to arrange meetings with U.S. officials. Helping a foreign entity or individual engage directly with the U.S. government, such as by setting up a meeting, is perceived by the Department of Justice as core FARA activity. The statute can be triggered even without a contract or payment, and even if the foreign person is not a government official. Companies may think that they are simply doing a favor for a foreign business partner, when they in fact have waded deeply into FARA territory. To the extent the contact is unrelated to the company’s own activities, the commercial exemption will not apply. And even if the company is already LDA registered, it is probably not registered for the foreign business partner, so the LDA exemption also will not apply.
- Private sector lobbying on an issue that is deeply connected to a foreign government’s interests. Global companies often face commercial issues that are intertwined with governmental issues. For example, companies often have legitimate business reasons to lobby for or against sanctions on particular countries, or to encourage the United States to adopt specific trade policies directed at particular countries. It may seem natural to coordinate that lobbying with the government of the affected state, but working too closely with a foreign government or its agents can create FARA risks. What if the foreign government “requests” that you target your activities in a particular way? Even if your company has a scrupulous LDA compliance program, the LDA exemption may not be available if the activities principally benefit the foreign government, despite your own parallel commercial interest.
- Requests from a foreign embassy, or from other foreign government officials, to arrange meetings or to provide strategic advice regarding a policy matter before the U.S. government. Depending on the particulars, including whether the advice is rendered within the United States, it is possible that advising on influencing U.S. policy or public opinion could trigger registration. Arranging meetings also likely would trigger registration.
- Business development activities involving foreign clients. It is not unusual for law firms, public relations firms, consulting firms, and government contractors that do business around the world to be asked by foreign clients for favors, such as making an introduction to officials or thought leaders in the United States, providing advice on a dispute with the U.S. government, or helping with media relations or other staff support for a client’s visits in the United States. While these may seem like routine client relations activities meant to strengthen relationships, they could trigger FARA registration, depending on the circumstances.
Although most major corporations have elaborate compliance manuals and training efforts, FARA is often a blind spot that is absent from corporate compliance programs. In light of recent enforcement trends, most companies that have international business operations, or otherwise deal with foreign governments and firms, should include FARA in their compliance programs. Those companies that do have FARA compliance policies often integrate them with their global anti-corruption and government affairs policies.
Covington has one of the nation’s most experienced and long-standing FARA practices, which includes attorneys in our Election & Political Law and White Collar Defense & Investigations practice groups. The firm litigated and won a rare civil case limiting the scope of DOJ’s authority under FARA, in Attorney General of the United States v. Covington & Burling. Covington routinely advises U.S. and international clients on compliance with FARA, obtains advisory opinions from the FARA Unit, represents clients in FARA audits and internal investigations, and defends clients accused of violating FARA.
This information is not intended as legal advice. Readers should seek specific legal advice before acting with regard to the subjects mentioned herein.
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