The National Security Bill has recently completed the committee stage in the House of Lords and is due to commence its report stage on 1 March, before heading back to the Commons for MPs to debate the amendments suggested by the Lords.

One aspect of the Bill attracting particular controversy is the proposed Foreign Influence Registration Scheme (the 'FIRS'). This could potentially see a raft of non-UK businesses required to register with the Secretary of State where they communicate with government officials as part of their day-to-day business.

In this article, we set out an overview of the FIRS in its current form.

Who is caught by the scheme?

The FIRS will apply to specified foreign entities (referred to as 'foreign principals') as well as persons in the UK that enter into particular agreements and arrangements with those entities. Foreign principals are defined as:

  1. foreign powers;
  2. companies incorporated outside the UK or the Republic of Ireland; and
  3. unincorporated associations formed under the law of a country or territory other than the UK or the Republic of Ireland.

The relevant provisions do not apply to individuals acting in a personal capacity. There are also a number of exemptions set out on the face of the Bill including organisations set up under, or recognised by, an agreement between two or more countries (so UN bodies for example), news publishers and lawyers carrying out legal activities. The Secretary of State has a power to provide further exceptions in regulations.

Outside those exceptions, the non-UK companies caught are not limited to those incorporated in particular jurisdictions or which are owned by particular people (in contrast to the Australian scheme, for example, which is set up to catch companies with a significant element of foreign government control).

What activities are caught?

The Bill will create two situations in which registration is required – where a person (in the UK or abroad) has an 'agreement or arrangement' to undertake 'political influence activities' in the UK at the behest of a foreign principal, or where a foreign principal (apart from a foreign power) undertakes political influence activities in the UK itself.

A political influence activity is defined as:

  1. making any communication with a list of specified persons (including ministers, MPs, Lords, members of devolved parliaments, employees of the previous categories, mayors (but not councillors in local government), members of the executive of political parties, election candidates, senior civil servants and police and crime commissioners);
  2. making public communications (except where it is clear that the communication is made by or at the direction of the non-UK body); or
  3. distributing money, goods or services to UK persons;

for the purpose of influencing:

  1. an election or referendum;
  2. a government decision;
  3. Parliamentary proceedings in the UK or devolved legislature;
  4. the proceedings of a political party; or
  5. an MP or Lord, or member of a devolved legislature.

Most of these concepts are not defined. This lack of definition means there is not as much clarity as there could be, as the concepts are incredibly wide.

For example, it is not clear what would be caught by activities 'for the purpose of influencing an MP'. A strict interpretation could encompass activities which seek to build goodwill on the part of an MP but are not directed towards influencing any particular decision. Likewise, it is not clear whether hospitality – such as taking an MP out to lunch – would count as 'distributing… goods' to that person.

However, it is clear that the concept of influencing an MP or Lord is not limited to seeking to influence government decisions or policy, or legislation.

Likewise, a communication could include a text, email, meeting or even where a person is on the panel or gives a presentation at a conference.

So, a panel member representing a non-UK company at a conference on health policy may need to register if there is a member of an MP's staff in the audience. A lunchtime conversation at the conference may also be caught where another representative of a non-UK company tried to convince the staff member that his or her MP should consider a particular viewpoint.

As such activities must be registered in advance, such situations are particularly problematic in practice.

In addition, where a non-UK company tells its UK subsidiary to undertake any of the activities above, this could be considered an 'arrangement' with a non-UK company that the UK subsidiary would be required to register.

What form does registration take?

Where a person has an existing agreement or arrangement with a foreign principal to undertake any of the above activities, it will have three months to register them with the Secretary of State after the relevant provisions in the Act come into force (and could not conduct such activities in the meantime).

New arrangements made after the provisions come into force must be registered within 10 days of the day on which the person made the agreement or arrangement. The obligation to register will be on the person undertaking the activity, not the person on whose behalf it is undertaken.

Likewise, a person would need to register with the Secretary of State in advance before undertaking any of the above activities on their own behalf.

The Bill contains powers for the Secretary of State to make regulations setting out the form that registration must take. There is therefore no detail as yet in terms of exactly what must be registered or, for example, whether each separate activity must be registered separately in advance or whether a generalised registration can be made.

There is a provision that requires a person to notify the Secretary of State within 16 days where there is any material change to a registered arrangement or activity.

The Secretary of State may make regulations about the publication or disclosure of registered information. The Government's factsheet in relation to the scheme indicates that at least some information will be published.  

The Secretary of State also has the power to formally request information of registered persons, those persons that she reasonably believes should be registered and others.

What are the penalties?

The Bill outlines a number of offences in relation to the obligations above. These include:

  1. carrying out foreign influence activities without the required registration in advance;
  2. providing false, inaccurate or misleading information in a registration or in response to a formal request from the Secretary of State;
  3. carrying out foreign influence activities where the person knows false, inaccurate or misleading information has been provided in a registration or in response to a formal request from the Secretary of State; and
  4. failing to comply with a request by the Secretary of State for information.

Personal liability can also fall on office holders and employees in relation to some offences.

Such offences carry a penalty of two years imprisonment and/or an unlimited fine (or both) upon conviction by the Crown Court or imprisonment of up to 12 months and/or an unlimited fine upon conviction by the Magistrates' Court.

The enhanced tier

In addition to the provisions above, there are also a number of provisions (the 'enhanced tier') which are more explicitly directed at foreign powers and their entities rather than non-UK companies. The Bill contains a requirement – backed by an offence – for a person (P) to register an agreement or arrangement with a foreign power or person specified by the Secretary of State under which P will carry out or arrange to be carried out 'activities' (undefined) in the UK.

Likewise, a person specified by the Secretary of State may not carry out 'activities' in the UK without registration.

Next steps

The Bill has just finished its committee stage, so must now complete its report stage in the Lords before returning to the House of Commons. The report stage will commence on 1 March and, of the two amendments currently tabled for consideration at the report stage, neither relates to the FIRS.

There is a lot that remains unresolved in the proposals and limited opportunities for Parliament to either narrow or clarify the application of the FIRS.

There has been a high degree of pushback from various sectors including charities, NGOs, and companies both in the UK and abroad, and there has previously been some indication that the Home Office is conducting a rethink. However, that does not seem to have prompted a significant narrowing of the proposals at committee stage.

One hopes that the power of the Secretary of State to make regulations carving out further exceptions will afford a further opportunity to ensure that the potentially registration obligations are appropriately targeted, rather than taking the current broad approach.

However, non-UK entities (and the UK entities that act on their behalf) should monitor developments closely to ensure that they do not fall foul of the requirements if and when they come into force.

Please get in touch with Kieran Laird if you have any questions about this article.