With the Department of Justice (“DOJ”) giving increased attention to Foreign Agent Registration Act (“FARA”) enforcement, companies that have international business operations or otherwise deal with foreign governments and firms need to take appropriate measures to ensure compliance with FARA’s onerous registration and disclosure requirements. Companies are potentially released from FARA’s disclosure requirements, however, if they meet one of FARA’s statutory exemptions. Below is a brief outline of three widely used exemptions.
FARA’s Commercial Exemption includes “private and nonpolitical activities in furtherance of the bona fide trade or commerce” of a foreign principal. According to FARA’s implementing regulations, trade and commerce include the purchase and sale of property, services, or commodities. The Commercial Exemption also covers “political activities” undertaken for a foreign corporation “in furtherance of the bona fide commercial, industrial, or financial operations of the foreign corporation.” Not covered by the Commercial Exemption are activities “directed by a foreign government or political party” or that aim to “directly promote the public or political interests of the foreign government.” In determining whether the Commercial Exemption applies, due diligence into whether the foreign principal is closely affiliated with a foreign government, or where the commercial interests are intertwined with sovereign government interests is necessary.
Lobbying Disclosure Act Exemption
Although registration and reporting under the Lobbying Disclosure Act (“LDA”) is far less burdensome than FARA, entities or agents engaged in lobbying actives and registered under the LDA for those same activities are exempt from registration under FARA. Pursuant to FARA’s implementing regulations, the LDA Exemption does not cover lobbying activities on behalf of a foreign government or foreign political party, or if either of the aforementioned are the principal beneficiaries of such activities.
The Lawyer’s Exemption
As its name suggests, the Lawyer’s 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. Notably, FARA’s implementing regulations limit the Lawyer Exemption so as not to exempt 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.”
There remains considerable uncertainty regarding the outer boundaries of these exemptions because they are not well defined, lack sufficient DOJ guidance, and are rarely discussed in case law. In light of the DOJ’s stated interest in strengthening FARA enforcement and the difficulty in determining whether an exemption applies, companies that have international business operations or otherwise deal with foreign governments and firms are advised to seek guidance from competent FARA counsel.
See our previous article Emerging Trend: DOJ Turns to Rarely Used FARA Statute in Recent Surge in Prosecutions, available here.