UK foreign influence registration scheme now law: Political scrutiny wins but problems remain

While still onerous, timely interventions have led to dramatically improved legislation

Today the UK National Security Act received Royal Assent and became law. Legislation was well advanced when a key new proposal emerged last year: a foreign influence registration scheme. Its objective, which we support, was to stop evil undercover foreign influence in UK political processes. However, the scheme was likely ineffective against such covert activity, but risked criminalizing a wide variety of individuals, charities, academics, businesses and others for open behaviors generally encouraged as benign.

Our information sessions (including detailed and summary versions) expose the harmful consequences with examples. A broad cross-section of business, educational and charitable groups further shed light on the lost investment and chilling impact on the quality of international engagement with the UK that was threatened. In a good example of the House of Lords in their review role, the Government listened.

What the schematic means in its final form

Under the “primary level” scheme, a number of criminal offenses potentially apply to individuals and entities involved in “political influence activity” in the UK. This is much broader than mere political/political lobbying and includes communications relating to UK government and administrative decisions. These crimes relate to those acting under the direction of a “foreign power” or arranging for others to do so. To prevent these offences, agreements must be accurately registered, before the applicable deadline with the Home Secretary, and kept up to date.

The UK government’s last minute amendments, limiting the primary tier scheme to only where directed by a foreign power, dramatically reduced its applicability. The original proposals would have applied to management by any entity registered or formed abroad. The definition of a foreign power is limited to the head of a foreign state, the foreign government itself (or part of it), or the ruling political party. In contrast to the equivalent australian outlinethe amended UK proposals do not include self-financed or state-owned enterprises.

Concerns remain, including over the “enhanced level” scheme (see here). However, the changes have gone a long way in addressing our original concerns.

Implications for companies and investors

The most obvious areas of sensitivity are for organizations:

• that may fall under the definition of a foreign power, or be run by a foreign government (such as sovereign wealth funds); and
• where acting under contractual or other obligations to foreign governments and this requires engagement with UK government policy or decision makers (such as investment banks).

Such organizations should ensure they have a compliance policy to address the new scheme. the home office proposes that the Scheme will come into force in the spring of 2024. In the meantime, the EU is considering its own version of the legislation (although this summer it was delayed).