The proposed regime is wider and more onerous than the regimes in Australia and the US cited as precedents. This briefing includes examples of some of the unexpected impacts on businesses, charities and others who may be surprised that they, or their activities, are caught by proposed national security legislation with criminal sanctions.
James Palmer is Partner and former Chair and Senior Partner. Paul Butcher is Director of Public Policy
The National Security Bill was introduced in Parliament in May 2022. It passed through the House of Commons and is now before the House of Lords. Part three of the Bill, establishing a new Foreign Activities and Foreign Influence Registration Scheme, passed through the House of Commons with little scrutiny having been tabled late in the Bill's progress. This is despite this part of the Bill raising many of the challenges and disproportionate burdens that amendments and limits to the more carefully considered earlier parts of the Bill have sought to avoid or balance.
It raises significant challenges for a wide range of businesses and others with international dimensions or interests, including charities, NGOs and institutions and other friendly international bodies.
In essence the scheme requires all foreign organisations, including companies, LLPs and unincorporated associations, whether businesses, charities or otherwise, to register publicly each of their interactions with UK policy and decision makers. Foreign organisations are defined very widely. Those acting for foreign organisations are also caught. Foreign governments do not have to register, but those acting for them do. Irish organisations are also excluded, unless directed by a third country organisation, but no other friendly country is excluded. (Guernsey and Jersey, for example, are caught as foreign). Exemptions are minimal: lawyers have been excluded in relation to defined legal activities, by a recent amendment, but other sectors or activities are all caught.
The regime effectively assumes that any private interaction by or for a foreign organisation with MPs, peers, other policy makers and their staff, however friendly the home country, is suspicious and requires public registration. Many public communications will also be caught.
The likely effectiveness of the regime is also questionable, as it leaves significant opportunities for foreign influence by individuals in their own capacities, or for example by use of UK or Irish organisations not provably directed by foreign organisations. It runs significant risk of burdensome bureaucracy for law abiding, friendly and useful foreign engagement, with avoidance and non-compliance by the malign.
The registration scheme was developed with limited consultation. The brief consultation document on "Legislation to Counter State Threats", including on a proposed "Foreign Influence Registration" scheme, had very limited responses (albeit including a concerned response from our firm) and most affected organisations continue to be entirely unaware of it.
The consultation did not have developed proposals or seriously canvass alternative approaches to its primary goals: (1) requiring foreign spies to register; (2) foreign funding for scientific research and transfer of sensitive research; and (3) interference in elections and more widely (the ISC Russia Report is cited).
The problem is valid concerns about emerging threats from a handful of malign states, illustrated by the ISC Russia Report, risk materially restricting the UK's ability to engage effectively with the vast majority of the world, even when that engagement is vital to UK prosperity, health, defence, trade and success.
As the examples in Part B show, the scheme as proposed would risk, impeding key UK activities like exchange of security data (ironically), pandemic response protection, trade and investment, cultural and human rights initiatives, among many others.
Instead of defining and focussing on specific concerns, because certain influences are malign, the proposal presumes all foreign organisations are suspicious and that policy makers cannot themselves be vigilant against malign foreign influence. It is not clear from the UK Government's impact assessment that there is clarity on the practical implications that arise by operation of the scheme. Moreover, it is unclear whether the hoped-for benefits of this approach outweigh the cost of bureaucratising so much global engagement with the UK.
The proposed regime is far wider and more onerous than the precedent regimes cited in Australia and the US. The UK is proposing rules without key exemptions applied in those regimes, which themselves may not be easily compatible with the UK's role as a global centre for investment, the arts, human rights and a wide array of other activities.
The rest of this briefing is split into two parts:
- PART A – KEY ASPECTS OF THE PROPOSALS: this outlines the main elements, respectively of:
- What Government terms the "primary tier" of the scheme – the Foreign Influence Regime under clauses 66 to 70 of the Bill.
- The "enhanced tier" – the Foreign Activities and Specified Persons regime under clauses 62 to 65 of the Bill.
- PART B – EXAMPLES: this includes examples showing some of the potentially dramatic and unwitting impacts of, in particular, the primary tier, but also more briefly, in relation to the consequences of the enhanced tier. They are only a selection of illustrations highlighting certain of the potential issues.
In our view the examples in Part B are the best demonstration of the kinds of issues that a consultation on detailed proposals would have flushed out.
PART A – KEY ASPECTS OF THE PROPOSALS
REQUIREMENT TO REGISTER FOREIGN INFLUENCE ARRANGEMENTS – ‘PRIMARY TIER’
1. Registration requirements fall on almost all foreign entities, with no focus on national security related characteristics
The scheme requires the registration with the Home Office on a public register of any:
- Arrangements to carry out political influence activities within the UK or to make arrangements for such activities to be carried out in the UK at the direction of a foreign principal – in which case the person or entity (for example a UK organisation) agreeing to such an arrangement must register.
- Political influence activity, where the activity is being carried out by the foreign principal itself - in which case the foreign principal must register (unless it is a foreign power).
The Bill defines a foreign principal as a foreign power or a foreign body corporate or any other organisation established outside of the UK. Companies or other organisations formed under the laws of the Republic of Ireland and a limited number of governmental international organisations are also excluded from this definition. We assume the UN, NATO and other similar treaty-based bodies will be excluded by the latter.
This means, for example, that in addition to all foreign organisations, a foreign subsidiary of a UK business would, in any event, fulfil the criteria to be caught by requirements of the scheme. Similarly a UK subsidiary of a benign and law abiding foreign organisation where directed (or worried about the perception of direction) by its parent, would be caught. Whereas UK or Irish subsidiaries of, for example, Russian or North Korean government owned businesses or political organisations would not necessarily be caught if there was not evidence of foreign direction and they were not minded to. Jersey and Guernsey companies will be caught as "foreign", along with organisations from other "Five Eyes" countries and EU countries, and indeed every other country.
In contrast, the equivalent onerous Australian scheme is limited to organisations which have a sufficient element of foreign government ownership or control (whether immediate or ultimate) and is subject to other exemptions. The US FARA regime also focuses largely on foreign government related entities, albeit not as clearly. Even those are problematic regimes for international activities, trade and cultural interaction.
As the examples in Part B show, we fear that the UK scheme may inadvertently maximise bureaucracy and over-compliance by those parties who we suggest should not be subject to the scheme and in relation to activities which should not be subject to the scheme, while at the same time allowing malign actors to avoid the effect of the provisions.
2. The scheme relates to a large array of activities with no focus on national security related characteristics
The following activities fall within requirements for public registration of each activity:
- Any private communication to decision makers such as government ministers, election candidates, members of the UK or devolved Parliaments (including employees or staff of peers or of any other members of any UK parliament), and senior civil servants (broadly being from the level of 'deputy director' or equivalent including at many regulators) and any other category which the Home Office wishes to add from time to time.
- Public communications where it is not reasonably clear that the communications are being directed by a foreign principal (no such qualification applies for private communications for a disclosed foreign principal).
- Disbursement of money, goods or services to UK person.
These would each be political influence activities requiring registration by any foreign principal or any advisor under the direction of a foreign principal if the activities were aimed at influencing:
- Any decisions at all of the UK or devolved governments.
- The proceedings of any part of the UK or devolved parliaments (including any proposed legislation).
- Proceedings of a UK registered political party.
- Any communication at all aimed at influencing in any way at all (ie, not limited to government decisions or policy) an MP, peer, or member of the devolved parliaments (but in this case excluding senior civil servants and staff members of peers and MPs, etc) can also be caught on any of the other category of issue not referenced by the Bill.
In practice this means a large array of routine UK/ devolved government/regulatory decisions for business (eg, licence renewals, authorisations, enforcement decisions, planning applications, from whatever branches of government – eg, BEIS, Ofgem, the CMA, HMRC and so on) would have to be assumed to be in scope in practice in circumstances where the content might involve civil servants of deputy director (or equivalent) in correspondence and meetings. The 2014 lobbying legislation, which this scheme substantially overlaps with and duplicates, mitigates this with a more tightly drawn list of relevant recipients of communication and categories of lobbying.
As the examples in Part B show, the UK scheme may inadvertently maximise bureaucracy and over-compliance for legitimate and benign activities, including in relation to essential engagement in public policy development. This is in sharp contrast to the still onerous US and Australian schemes which themselves would have significant implications.
3. The information potentially requested has limited confidentiality exemptions and is unusually intrusive, overriding normal privacy rights, without balancing evidence or proportionality being required under the scheme. The broad powers may, we fear, create pressure to use them, to avoid criticism. The bureaucracy looks potentially significant and challenging to comply with.
In addition to the registration requirements, the Home Secretary has wide powers to issue information notices to those who have already registered or who she believes should have registered.
While there are narrow exemptions for legally privileged material or “confidential journalistic material”, there are no other exemptions from registering information or responding to information notices. This includes, for example, for information which is commercially sensitive, or information which could be a risk to life or is deeply private, personal, or irrelevant.
The Home Secretary can make any regulations she wishes about:
- The information required to be provided.
- About the publication of registered information or any information provided in response to information notices.
Publication is seen by the UK Government as "an important feature of the scheme" for "increasing transparency".
There are no protections other than Human Rights Act and general public law for business, charities or others to ensure that the rules relating to publication which the Home Secretary decides to adopt from time to time will protect personally or commercially sensitive information or other sensitive information (eg in relation to details of a human rights case that could endanger the victim). Nor that, even if the rules are sufficient, that mistakes will not be made with disastrous consequences.
4. The scheme criminalises an almost uncircumscribed range of individuals, charities, academics, businesses and other organisations and individuals, for behaviours and activities usually categorised and encouraged as benign.
The Bill creates a range of criminal "foreign influence offences" for breaching the scheme, with the maximum penalty for each being two years' imprisonment, a fine or both. Foreign influence offences include where:
- Any service provider (or, eg, a UK subsidiary of a foreign principal) agrees to engage in "political influence activities" for any foreign principal and fails to register within 10 days of the agreement.
- Where such a service provider (or, eg, a UK subsidiary of a foreign principal) committed such an offence due to the negligence of an officer (or equivalent) then the officer is also personally criminally liable.
- An officer or employee tries to protect commercially or personally sensitive information in relation to their registration submission, may commit the "offence of providing false information."
- Such officer or employee may then also be committing an offence of "carrying out activities under arrangements tainted by false information.'
- A foreign principal engages in "political influence activities" itself and fails to register in advance (with personal liability also falling on office holders or employees for their own activities or failure to register).
- Any person who originally made a registration but then fails to notify the UK Government of any changes within 14 days of the change occurring in circumstance which would make the original registration information "inaccurate or misleading in a material way". Even years later; there is no time limit.
- A recipient does not comply with an information notice within the timescale which the Home Secretary will specify in due course in regulations.
The serious criminal, reputational and other implications of this scheme mean that certain optional engagement (for example in relation to improving the quality of public policy outcomes or active consideration of investments into the UK) may cease. Bureaucracy and forced early disclosure are often deterrents to investment or engagement.
For unavoidable matters, including necessary routine engagement on UK Government decisions, bureaucratic processes and workarounds will be put in place. As ever, the burden, while heavy for all those impacted will be greatest for smaller businesses, charities, or other entities and individuals within them seeking to comply. The scheme's scope for criminal breach by the unwitting, may also provide malign actors with further tools with which to blackmail exposed individuals who risk inadvertent criminal liability (for example MPs and peers).
It may also, we believe, create serious impediments to the democratic work of legislators and those working with them. It is effectively a completely new regime to control political access to legislative insights.
REQUIREMENT TO REGISTER FOREIGN ACTIVITY ARRANGEMENTS - ‘ENHANCED TIER’
The 'enhanced tier' of the scheme allows the Home Secretary to specify a foreign power, or entity other than a foreign power which is controlled by a foreign power, as being a 'specified person' under regulations. Thereafter, any person or organisation that agrees to provide or arrange for the provision of any service/ goods supply for the specified person ("a foreign activity arrangement") risks committing a criminal offence, with up to 5 years’ imprisonment, a fine or both if they fail to register in time. Such activities could include:
- Supplying energy, water or other utilities.
- Supplying secretarial services.
- Delivering food or catering services (other than to an Embassy or diplomatic mission).
- Emergency medical assistance.
- … anything
The Home Office has not explained why the primary or enhanced tiers are not focussed on more obviously national security related matters. Instead, the enhanced tier catches all services. The fact that such a breadth of ordinary and legitimate activity is deliberately being caught (ie, any activity whatsoever) under the enhanced tier is underlined by the fact the scheme includes an exemption for diplomatic missions and similar for "goods or services which are reasonably necessary to support the efficient functioning … for example, the provision of catering or maintenance services“.
The applicable criteria for being considered to be "controlled by a foreign power" are broad, and in many cases will not be ascertainable by a third party. For example, it would suffice for the foreign power to be able directly or indirectly to appoint or remove a single officer of the entity or for there to be any agreement or understanding or custom or practice of any kind by which the foreign power has the right to direct or control the activities of the entity in whole or in part. Partial control suggests control over any part suffices.
We set out at the end of the examples in Part B, a few examples showing some of the material concerns with this enhanced tier regime.
VERY LIMITED EXEMPTIONS FOR PRIMARY AND ENHANCED TIERS
There are narrow exemptions in relation to the primary and enhanced tiers of the scheme for:
- Arrangements to which the UK Government, or someone acting on behalf of the UK is a party.
- Diplomatic missions.
- Recognised news publishers.
- Legal activities.
These exemptions leave orders of magnitude more entities and activities in scope than equivalent US and Australian schemes (see below).
UK PROPOSALS ARE ORDERS OF MAGNITUDE MORE RESTRICTIVE AND INTRUSIVE THAN THE EQUIVALENT UNITED STATES AND AUSTRALIA SCHEMES
As with the UK proposals, the United States' 1938 Foreign Agents Registration Act (FARA) is written so widely that, if interpreted literally, it could require registration even for routine business, charitable or other activities. However, in practice this decades old legislation has not been slavishly followed. This largely reflects the fact there are key exemptions which have provided enough comfort to avoid a bureaucratic quagmire, still with about 400 registrations in comparison to the many thousands that the UK scheme would in our view require. FARA's commercial and academic exemptions (which have no UK equivalent) are key. The commercial exemption, for example, exempts “private and non-political activities in furtherance of the bona fide trade or commerce” of a foreign principal.
Australia's 2018 Foreign Influence Transparency Scheme Act (FIT) similarly has exemptions for commercial activities, for example a limited exemption where the activity is "representing in good faith the interests of the foreign principal in relation to a government administrative process." There are also other exemptions with no UK equivalent such as for registered charities, humanitarian aid, members of Parliament, religion, industry representative bodies and artistic purposes.
Furthermore, FIT only relates to foreign governments or organisations or individuals that have a sufficient element of foreign government ownership or control (whether immediate or ultimate). Such an approach would immediately exclude more than 99% of those organisations caught by the UK proposals. Notwithstanding the much more carefully targeted approach of the FIT scheme, as one of the leading Australian law firms our experience is that there has still been material costs and over-compliance relative to its intent due to the cautious interpretation of legislation that always occurs in areas where there are reputational and criminal law implications.
The UK proposal does not attempt to focus the scheme on particular organisations or activities, nor has this had any consultation debate on key choices and so it is orders of magnitude more onerous than either the equivalent US or Australian schemes. In any event, it could be argued that the UK should not merely be seeking to be as proportionate as the US and Australian schemes, it should seek to reflect the UK's role as an international centre. The UK relies far more heavily than either the US or Australia on being a cross-border, business, finance, and services export hub.
The UK also seeks to be a global centre for a range of issues from technology to bioscience, genetics, AI and other areas (many already protected by the National Security and Investment (NSI Act) and others such as the arts, human rights and aid.
PART B – EXAMPLES
EXAMPLES FOR THE FOREIGN INFLUENCE REGISTRATION SCHEME ('PRIMARY TIER')
a) Two peers collaborate: causing each to commit multiple crimes between them while also causing a Danish wind technology fund to commit multiple crimes each punishable by up to two years' in prison.
A is a peer and a non-executive director of X, a Danish wind technology fund. A was made a life peer due to their contribution to the UK energy industry. The directorship is included within the Lords' register of interests.
B is also a peer. Neither A nor B are Ministers. At a board meeting of X it was suggested that A speaks to parliamentary colleagues about (1) opportunities for the Danish fund to invest in the UK, and (2) A's experience of how the UK could improve the proposed legislative framework for wind financing currently going through Parliament. A arranges to meet B to discuss this.
X must register before the meeting in relation to A's experience sharing on legislative frameworks, to avoid being accused of suggesting legislative change under a "foreign influence arrangement" with X made in their capacity as a director of X. It appears that A should also have registered this arrangement within 10 days or else they have committed a criminal offence. In any event, as a director of X aware of the facts, A may have committed a criminal offence if they do not ensure X registers before meeting or speaking to A about the issues and A will also have put X in criminal breach. A will also have committed an offence due to having the meeting with B (a "political influence activity") when the activities had not been registered by X.
If at the meeting B agrees with A's analysis and agrees to talk to other peers or MPs about A's ideas for improving the proposed legislative framework then B will have committed a criminal offence if B does not register this new "foreign influence arrangement" within 10 days of the meeting.
These criminal offences also risk multiplying outside the scheme (eg aiding and abetting, conspiracy and so on).
b) Prevention of pandemic and virus research and insight sharing
Two academics based in Singapore together established a leading medical research institute within a globally respected Singaporean university. The first, Professor A, is Professor of Epidemiology, the second, Professor B, is Professor of Virology.
They generate research and disseminate it globally to other research scientists, doctors and health bodies around the world. They do so in advance of publication in public journals or online. They also research and analyse the effectiveness of relevant government policies, mostly in Asia, but at times globally. They also issue urgent actions updates, not published generally, but made available to specific bodies and individuals, following research developments, sharing data and trends in disease spread: this includes alerts and advice to health authorities.
They are aware their communications are highly influential on policy makers globally including in the UK. However, for a period post implementation of the new UK National Security legislation they carry on all activities as before, without limiting distribution and communication into the UK.
After a recent visit to the UK by A and B, attending a health conference, engaging policy makers including Ministers, peers, MPs and others, they return to Singapore. Their bank in Singapore, a global bank, prompted by its global compliance function, contacts them to ask if they have considered if their activities in or into the UK are legal, expressing concern they are not. They take advice and realise they have committed numerous serious criminal offences under the foreign influence regime in Part 3 of the new legislation. They decide not to visit the UK again, notwithstanding invitations to speak at a forthcoming Oxford University hosted global conference on pandemics, and despite their proposed hosts trying to reassure that the legislation "is not meant to cover them".
They have also been advised that the proceeds of fees and expenses paid to them for their recent visit to the UK and for future visits, if they do not register each engagement judged to be a foreign influence arrangement, may be unlawful "proceeds of crime". Accordingly, their bank closes their credit card accounts which they used for travel to the UK. The banks are considering closing all their accounts to avoid receiving tainted proceeds into the UK.
A and B take all UK recipients off all their distribution and communication channels to avoid risk of further illegality. To register to receive an update, subscribers have to certify they are not in the UK, and they undertake never to communicate any of the information or recommendations into the UK.
One can easily conceive circumstances where A and B then lobby Asian countries and health bodies which they work with to block the UK as the location for a major new Europe based global pandemic research centre, as the UK in their view is now wholly unsuited as a venue to leading on any form of global co-operation on public good.
c) Constraining support for allied countries in times of war
The wife (X) of the president of a country, U, which has been invaded by a hostile state is herself president of a charity based in U seeking to raise funds for hospitals in U. She visits the UK privately. This does not require registration. A UK charity learns she will be in the UK and arranges for her to speak to private meetings of policy makers in the UK, including MPs, peers and officials, including about the work of her charity. X must ensure her charity registers before any of her meetings, as she is an officer representing her charity.
Because she is unaware of the legislation, and the meetings are fixed at very short notice, she fails to register. Meetings with her on the same subject set up by MPs, peers and others consequent on her (unlawful) original meeting are also likely to require registration and public disclosure.
This would be damaging to UK defence and national security goals.
d) Impeding sensitive civil rights engagement
K, a victim of torture and political oppression in their home country, L, set up a small co-operative organisation in K's small rural community in L. K has been released from prison in L, where K had been confined without charge for seven years. K makes a private visit to the UK, funded by friends, to visit a sick parent. K was allowed to leave L on the understanding K's teenage children remain in L, under watch by the security police of L to ensure K's compliant behaviour.
While in the UK a friend wants to introduce L privately and confidentially to policy makers to discuss both aid from the UK Government to K's and other cooperatives in L, and the human rights challenges in L. Irrespective of safety risks for K and K's children, K must publicly register as K will, as an officer of the community cooperative, be seeking to influence UK policy makers. If K only made a public speech in the UK, disclosing K's role with the community cooperative, K would likely not have to register. But a sensitive confidential meeting to protect K requires public registration putting K and K's family at risk for their lives.
e) Example of criminalisation of normal national security engagement with friendly state organisation, perversely precluding national security interests
A former Director of the US National Security Agency (A) works as a part time consultant for a US cyber security business (B), with close ties to the NSA, which it provides security services to. A is passionate about defence of democratic nations' security. A's role, which their consultancy obliges them to carry out, is to help raise security standards among US friendly countries and at the same time to explore opportunities for company B to provide access to cutting edge cyber defence services, including eg, to GCHQ. A approaches policy makers in the UK and also speaks at security sector events and meetings in the UK and virtually which policy makers attend, to express views on necessary changes to security approaches and policies to face developing threats: A should publicly register each "foreign influence arrangement" made. A must give sufficient detail of their influence, even though disclosing the specific policy concern may tip off cyber criminals who they are seeking to counter.
A is unaware of the detail of the UK FIR regime and assumes it cannot be more onerous than FARA in the US. A knows no registration has been made (A would have been involved if registered) and A knows A is seeking to influence policy makers.
A commits multiple criminal offences. "Proceeds of crime" laws apply to A's fees affecting A's organisation's banking arrangements.
f) Minister for Health participates in trade mission to Japan with colleagues from an All-Party Parliamentary Groups (APPG) which leads to criminal conduct by Japanese businesses and their employees as well as various criminal offences by the Minister and MPs
The APPG are learning about foreign health services but also promoting the UK pharma and biotech sector. They all informally encourage contact from those they meet at different government and private organisations, once returned to the UK. There are resultant telephone and virtual call contacts to the Minister and other APPG members, including over policy issues; those visited then wish to meet proactively the Minister and APPG members on their next visits to the UK. Some were encouraged to contact by the Minister (but no formal invitations issued), others by APPG members.
The foreign organisations must register before engaging with the Minister or APPG members in the UK (absent formal invitation in the case if the Minister or in any event for other APPG members). They may also need to do so before virtual calls into the UK on the basis that such cross-border contact is “in the UK”.
Criminal conduct by the foreign organisations and their employees will clearly follow, solicited by the Minister and APPG members, unless they flagged the need for registration. There is at least a question as to whether the parliamentarians on the facts may have committed offences of aiding and abetting or conspiracy to break the scheme laws.
g) Jersey registered renewables fund based in the UK with UK staff and UK owners must pre-register before engaging in industry discussions to improve UK investability or else put itself and its employees in criminal breach
It would be a criminal offence, with personal liability, for any UK office holder or employee of a Jersey registered renewables fund based in the UK to:
- speak at a roundtable discussion convened by a renewables industry investor membership body about a new renewables bill with a Deputy Director level civil servant or regulator in attendance;
- appear on a webinar panel on the same topic, the audience for which (or the panel itself) included an MP or peer;
- conduct email correspondence providing feedback on the same topic with the relevant UK department (BEIS) or regulator (Ofgem) which at some point is copied to a Deputy Director level or higher civil servant,
if the Jersey registered renewables fund had not registered in advance under the scheme and if policy decisions were discussed. It would be a criminal offence for the fund itself too. With this fact pattern further criminal offences under the scheme could rapidly mount.
h) The same Jersey registered renewables fund used a UK registered subsidiary, UK Routine Operations Limited, to manage its wind farm business – meetings and communications on routine operational matters can quickly put both companies and office holders and employees into criminal breach
If the same Jersey registered renewables fund as in example g) above, entered into arrangements under which its UK registered subsidiary, UK Routine Operations Limited, carried out its routine operational matters then it would be a criminal offence for the subsidiary to:
- discuss with a Deputy Director level or higher civil servant or regulator in attendance to influence a decision - for example with the energy regulator Ofgem in relation to an offshore transmission competitive tender process;
- conduct any email correspondence on this topic which at some point is copied to a Deputy Director or higher level civil servant;
if UK Routine Operations Limited had not either:
- registered the initial arrangement with the Jersey registered renewables fund under the scheme within 10 days of the original agreement; and
- each of a) and b) within 14 days of them occurring.
Or, if UK Routine Operations Limited had not already registered its initial arrangement then it must have registered prior to a) or b) occurring.
In any event, if any of the office holders or employees of UK Routine Operations Limited engaging in either of a) or b) above was also an office holder or employee of the Jersey registered renewables fund then they would also be personally criminally liable if the Jersey registered renewables fund had not registered the arrangements either prior to them occurring.
i) An officer of a Netherlands registered renewables energy investor tries to protect commercially sensitive information in relation to their registration submission relating to a different UK "national security" regime and commits at least two criminal offences as a result
An officer, P, of a Netherlands registered renewables energy investor is due to have discussions with the Investment Security Unit, part of BEIS. These discussions are to gain comfort that the highly commercially sensitive investment in the UK which they are considering will not raise national security issues under the recent National Security and Investments Act 2021.
Knowing that the register for the foreign influence regime is public, P ensures that the registration does not provide any commercially sensitive details. However, this is a mistake as there is no such exemption and so P will have committed the criminal offence of "providing false information" as the redactions make the registration "misleading in a material way". When P then attends the meeting, where they are relieved yet unsurprised to hear that no national security concerns will arise, they have additionally committed an offence of "carrying out activities under arrangements tainted by false information".
When P is notified by legal advisors of the (at least) 2 criminal offences that P has committed, P states that they do not wish to continue further business in the UK and are now nervous of travelling there. P asks why it was that the new foreign influence arrangement legislation seemed to have been introduced with no awareness of the National Security and Investments Act 2021.
j) A think tank on advanced robotics and artificial intelligence is based in London and incorporated in the UK, under the name, North Korean Interests Limited. It convenes and engages with MPs, peers and civil servants on topical regulatory issues, hosting events at country hotels. It does not need to register as there has not been any relevant arrangement between it and any foreign power notwithstanding the suspicions aroused by its name. It is a UK entity controlled by its owns staff.
Unlike most other examples where it is hard to see how they could ever be relevant to national security this one may be relevant. However, the proposed scheme does not catch it.
k) The German and UK subsidiaries of a UK listed defence company want to present to senior officials at the Ministry of Defence about a new capability: the group is UK controlled but the German manufacturing technology is a key component for the discussion.
The German sub of the UK plc must register before meeting any relevant policy makers.
l) A conference in Manchester on improving levelling up policies will include policy makers in the audience. There will be slides presented. The foreign presenters from the European construction industry and a US charity with experience in deprived Rust Belt cities will need to pre-register to avoid committing a criminal offence.
m) A political candidate's policy development and engagement requires full transparency
Shouting Lord Hutch has stood for Parliament in every election for 40 years, as a candidate for the Crazy Fun Party. He once came close to retaining his deposit, but typically receives a few hundred votes at most. An Italian music business approaches him to promote a music artist by working with them under a promotion agreement. Their support is linked to an understanding they will work together on the most absurd policies they can think of which the music artist will sing about as part of a performance art show. Registration requirements and disclosure will apply to every meeting with those representing the Italian company, and to music business intermediaries who came up with the idea and introduced them.
n) Crown prosecution of a serious assault is impeded
The newly arrived foreign employee of a European company operating in the UK is subject to a serious assault. The victim knows no one in the UK apart from work colleagues. The employee's English is not strong and the individual is suffering serious anxieties and PTSD following the assault. The individual bravely decides to report the incident to authorities with the help of the manager from the European employer. The manager is instructed by the employer to take all steps to support the victim, including supporting their employee through the horrific challenge, and urging the authorities to act. They meet with the local MP to urge legal enforcement over the assault. The MP agrees to contact the police and CPS.
However, because they are seeking, through the MP, to persuade the CPS to prosecute the assailant on behalf of the Crown, the manager, as approved and encouraged by the foreign employer, may need to ensure their European employer registers, as they are seeking to influence the Crown's decision to prosecute. Without this registration the Manager would be committing a criminal offence.
Indeed, even if the MP was not involved they would have to register as the CPS is part of Government, making Government decisions.
o) A Jersey LLP listed, resident and headquartered in the UK has to pre-register meetings.
A Jersey Company wishes to meet with senior officials to discuss the energy support measures and how the cost-of-living crisis is affecting their staff in the UK at their manufacturing plant in a coastal town. They must pre-register.
p) A Danish green energy fund (X) has £2 billion of capital to invest in European wind businesses.
X wants to understand the market and scope for legislative relaxations across Europe. X's directors call up contacts in the UK asking for introductions in the UK, including to those interested in wind investment and to policy makers about the challenges of the current UK planning regime. In every other EU country they can meet policy makers and exchange views/ suggest reforms that would help them invest. When told they have to register before such meetings in the UK they decide not to bother at this stage.
Why should they register, when other country options are available, and confidentiality is important to managing expectations on their undecided plans?
q) Civil rights organisation constrained
A civil rights organisation countering torture and modern slavery is formed and based in a developing country with a history of civil war and military autocratic rule. It has been funded by UK charities and NGOs.
The foreign organisation's founders are invited to the UK by a UK charity and introduced to policy makers including MPs and peers, themselves urged to set up further meetings with other policy makers. Policy makers effect introductions to more policy makers. However, the founders of the foreign civil rights organisation commit multiple criminal offences unless they register. MPs and peers may also commit offences.
r) Influencing an MP on a matter which is not a Government decision or policy issue or related to an election or party policy, still requires registration.
The definition of "political influence activity" provides in clause 68(3)(e) that communicating with an MP or peer, for the purposes of influencing that MP or peer, even if not to influence a policy view or Government decision or party policy, is caught by the scheme.
An MP, whose constituency includes the offices of a French company, is asked by the chief executive of the company to wear a T-shirt supporting the football team of the headquarters town in France of the French company. They also seek to persuade the MP to eat at their favourite French restaurant in the local town.
It seems clear that each of these requires public registration as seeking to influence the MP. Absent registration a criminal offence is committed by the French company and relevant employees.
s) UK leader of an Asian subsidiary makes brief contact with a staff member of an MP: registration appears required.
The head of Community Engagement at the Asian subsidiary of a global British company, Q, is travelling on business on a train in the UK. Q sits next to a peer's assistant. Q briefly discusses a charitable cause which Q's business campaigns for, which Q is passionate about. Q urges the assistant to speak to the peer, and to ask if the peer would be willing to support the charity's policy agenda, bearing on aspects of government spending and policy. Registration is required if Q could be said to be acting in their Community Engagement role. Q is travelling on business, talks about the employer's business and the business pays Q's train fare. Q is at risk of needing to register.
t) Foreign individuals lobbying for a hostile state do not need to register
Mr and Mrs X are originally from a country widely seen as hostile to the UK. However, they claim to be from the United States and lie about this. They also lie about ever living in their original home country. They have lived in the UK for many years. They are wealthy, having apparently sold a business some years ago. They sponsor the arts and seek to host dinners at their luxurious house in London with policy makers, also invited to stay at their estate in Gloucestershire.
Conversations regularly involve focus on the economic harm of sanctions against their original home country, the misunderstanding of that home country, the misunderstandings of that home country in Europe and other positions they espouse which would be widely challenged by independent news commentators. They do not need to register, as they are not acting under an arrangement with a foreign State or organisation, just acting as individuals.
u) Complaint to MSP about tax filing decision of HMRC
A foreign company operating in the UK believes HMRC have materially overcharged tax for several years. As well as appealing the findings, they contact their local member of the Scottish Parliament about the HMRC actions, which they believe need to be contested and challenged. The communication with the MSP about the decision of HMRC requires registration, as HMRC is a department of the Government and its decisions are government decisions.
EXAMPLES FOR THE FOREIGN ACTIVITIES REGIME RELATING TO "SPECIFIED PERSONS" ('ENHANCED TIER')
a) Pizza delivery to a specified person: punishable by up to 5 years in prison
A foreign power (a country) is specified by the Secretary of State. The country has an embassy in the UK as well as owning directly an institute building where its nationals, visiting officials or employees often visit.
A, who runs a small pizza business, is aware the country has been the subject of UK Government criticism. A knows that A's business has not registered (but is unaware of the detail)
A delivers pizza to the Institute pursuant to orders from a resident. A has not registered; A is aware they have not registered their own business. A is aware they are taking an order from the Institute and the foreign power will pay the cost. The conditions for an offence under clause 64(1) are therefore satisfied. The pizza delivery company and driver do not fall within the exemption for "catering" services to diplomatic missions.
b) Telecoms services provider to a specified person.
Company B has a contract with X, a foreign power, requiring the supply of telephone and internet services to the embassy (which is exempt) and also to the separate Institute building of the foreign power and to the private home of the Ambassador, who uses his home for work.
The exemption for "UK arrangements" does not apply as B is not the UK Government or someone acting under an agreement to which the UK is a party.
The exemption for diplomatic missions does not apply to the Institute building, and does not appear to apply to the personal private home in London of the Ambassador, which is not one provided by the UK.
c) Holiday cottage provision to employee of foreign power which is a specified person
M decides to take a break from working in London (at the embassy of N) and decides to spend a few weeks working from outside London, following the arrival of M's baby six months ago. N is a specified person.
M rents a cottage in the British countryside from P holiday rentals. The agent, P, and Q the landlord owning the cottage, are aware who M works for and that M intends to work there.
Y, the foreign power will sign the rental agreement and pay the rent. P and Q know they have not registered. They know that the cottage will be used for the purposes of M's work for the embassy. P and Q both commit criminal offences if not registered, even though it never occurs to either that registration might be required.
d) Restaurant proprietor commits criminal offence
A owns and runs a restaurant. B, a foreign government official from K, a specified foreign power, goes every week to A's restaurant. A is aware of B's job and of the fact that the UK Government has been unhappy with the Government of K. However, A likes B, who has been a regular customer for three years. As A is not providing catering to the embassy or ministry of K, it appears that in accepting meal orders from B, without registration, A may commit a serious criminal offence.
Concluding observations on Examples
Please note we have not yet tried to give examples of the problems arising through the deemed control of a person by a foreign power. Nor of some of the further complexities which arise under other provisions
Exemptions and avoidance
We have also not set out here in detail how the provisions can be avoided, but note:
- A foreign individual carrying on overt malign influence activities does not have to register if they are not (or there is no evidence they are) acting for a foreign organisation as opposed to pursuant to their own views and decisions.
- Perpetrators of malign influence will almost inevitably lie and hide their roles. The whole regime therefore faces serious challenges in identifying any materially useful information.
- An English or Irish company not provably controlled by a foreign organisation does not have to register. Use of Irish corporate vehicles will be encouraged for those wishing to avoid the greater ease of scrutiny of UK companies.
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- The maximum penalty for every category of criminal offence under the primary tier is 2 years' imprisonment, a fine or both.
- The maximum penalty for every category of criminal offence under the enhanced tier is 5 years' imprisonment, a fine or both.