In Part 1 of this series, I outlined the history of the Foreign Agents Registration Act (FARA), 22 U.S.C. 611 et seq., what triggers the need to register under FARA, and more specifically, when a person is viewed as an “agent” for purposes of FARA.
This post will focus on the Department of Justice’s (DOJ) aggressive enforcement of FARA and how companies can potentially avoid FARA’s onerous registration and disclosure requirements if they meet one of FARA’s statutory exemptions.
The DOJ’s National Security Division has a FARA Unit that is responsible for the statute’s enforcement. The DOJ may impose criminal penalties on agents who intentionally and willfully violate any provisions under the statute. These penalties can include fines up to $250,000 and imprisonment for no more than five years, or both. “Agents” under the statute who willfully make false statements or intentionally fail to provide material information in support of their FARA registration or supplemental statements are also subject to these penalties. However, in the past, DOJ has concluded that noncompliance with registration requirements to be unintentional. Under these circumstances, the DOJ will generally allow agents to rectify any deficiencies instead of pursuing criminal proceedings.
Some recent cases show DOJ’s aggressiveness in this area and how it seeks to use a broad interpretation of the statute to target individuals.
In July 2021, Thomas Barrack, former Trump Campaign advisor, was arrested and indicted for alleged illegal lobbying. Barrack and two codefendants were charged with acting and conspiring to act as agents of the United Arab Emirates (UAE), by attempting to advance the interests of the UAE at the direction of senior UAE officials. They allegedly tried to influence certain policy positions of then presidential candidate Donald Trump during the 2016 U.S. presidential election. Additionally, the defendants allegedly attempted to influence foreign policy positions of the U.S. government and shift public opinion in favor of the UAE. The indictment does not allege that Barrack was ever directly paid for his alleged work nor that the FARA unit ever notified Barrack that he was required to register under FARA. This case follows the pattern by the DOJ of using FARA to widen criminal liability and broadly interpreting criminal statutes. The case is ongoing and there is no trial date on the docket.
DOJ’s aggressive efforts have not always been met with success. In 2019, former Skadden partner and former White House Counsel to President Obama, Gregory Craig, was charged with making false statements to the DOJ in connection with his work for Ukraine. However, instead of charging Craig with a FARA violation, the government charged Craig with lying to the DOJ to avoid FARA registration requirements under a theory of false statements and omissions. The DOJ settled with Skadden, which included Skadden retroactively registering as a foreign agent, reviewing Skadden’s policies for responding to government inquiries, and paying the U.S. Department of the Treasury over $4.6 million made from Skadden’s work with Ukraine. However, Mr. Craig fought the case all the way through trial; the jury deliberated for a just a few hours before acquitting him of all charges.
DOJ’s indirect enforcement creates a very real risk. Individuals and companies must recognize their own FARA risks and evaluate internally whether their practices and activities may trigger FARA registration requirements. With the DOJ’s increased focus on FARA issues and with the subsequent increase in indictments over the past few years, it is paramount that entities engaged in any activities that could fall under FARA’s purview take a close look at potential registration obligations.
DOJ has tried to enforce FARA using a broad interpretation of the statute. However, entities can potentially be released from FARA disclosure requirements if their activities fall under the statutory exemptions. The three most commonly used exceptions are outlined below:
- Legal Exemption (Section 613(g)). The legal exemption releases those offering legal representation of foreign principals before courts or similar administrative proceedings from FARA registration, provided that the lawyer’s role is disclosed to the tribunal or agency. However, the exemption is limited, and it cannot exempt legal representation that attempts to influence domestic or foreign policies of the United States or with reference to the political or public interests, policies, or relations of a government of a foreign country or a foreign political party
- Lobbying Disclosure Act (LDA) Exemption (613(h)). Entities or agents engaged in lobbying activities and registered under the LDA for those same activities are exempt from registration under FARA. The DOJ has noted in its FAQs that the LDA exemption does not apply where a foreign government is the principal beneficiary of an agent’s activities.
- Commercial Exemption (Section 613(d)). This exemption includes private and nonpolitical activities in furtherance of the bona fide trade or commerce of a foreign principal and activities not serving predominantly a foreign interest. It is necessary to determine whether the foreign principal is affiliated with a foreign government, when deciding if the commercial exemption applies.
In conclusion, due to the DOJ’s increased enforcement of FARA as well as its broad interpretation of the statute, entities involved in international business and foreign governments face increased compliance risks. To avoid DOJ’s enforcement efforts, companies should conduct internal audits and determine whether their activities involving international clients trigger registration under FARA and whether any of the statutory exemptions will protect it.