Almost two years since the National Security Act 2023 became law, on 1 July 2025 both tiers of the UK Government’s new Foreign Influence Registration Scheme (FIRS), will finally ‘go live’. Despite our own partially successful interventions, alongside contributions by notable figures such as Lord Anderson, former Independent Reviewer of Terrorism Legislation, aimed at significantly narrowing the focus of FIRS and enhancing its workability, the obligations imposed by FIRS remain burdensome, particularly due to its criminal sanctions.
There clearly are genuine national security risks to grapple with, but this scheme is ill-focused on law abiding businesses engaging openly and without malign agendas. We have argued this, with some limited success, for several years now. We hope that, in due course, further regulations will be passed to lower the uncompetitive burden on UK based business.
The primary tier of FIRS has equivalents in the United States with its Foreign Agents Registration Act (FARA) and Australia with its Foreign Influence Transparency Scheme (FITS). The enhanced tier of FIRS has no equivalent in the world so far as we are aware.
What are the consequences for non-compliance?
Neither the primary tier, nor the enhanced tier of FIRS constitutes a ban on activities. Obligations all relate to the requirement for public registration. Many of these obligations have criminal sanctions attached. The maximum penalty is, respectively by tier, 2 or 5 years’ imprisonment, a fine (or both). Examples of obligations applying to both tiers include:
- Failing to register an arrangement within the relevant deadline
- Providing inaccurate or misleading information (including due to failure to update following a material change within the 14 day deadline)
- Less obviously (eg, for a UK subsidiary of a foreign State-owned entity):
- Where a person/entity carries out (or arranges for others to) primary tier/ enhanced tier activities when the arrangement should have been registered by someone else. Note that this is only an offence if the person/ entity knew, or having regard to other matters known to them, ought reasonably to have known, that they were acting pursuant to a foreign influence arrangement/foreign activity arrangement.
In a commercial context, offences would generally apply to the relevant business entity. However, there are various ways individuals could also be subject to criminal sanctions including where someone with management responsibilities agreed to the breach, including by neglect.
Iran and Russia are the first foreign powers to be specified for the enhanced tier – but China was seriously considered
From 1 July 2025, Russia and Iran will be specified foreign powers under the enhanced tier of FIRS alongside a couple of foreign power-controlled entities (eg the judiciaries of both Russia and Iran). The fact that both of these countries are heavily sanctioned, makes compliance more straightforward, although FIRS relates to a much wider range of activities than sanctions (but limited to those within the UK).
However, shortly prior to the July 2024 General Election, and indeed since, we understand that some have argued for the inclusion of China as a specified foreign power. This was included in the Conservatives manifesto. We and others have made the argument that, given China is the third largest trading partner to the UK, the requirements of the enhanced tier would have dramatic (and potentially systemic) implications for the UK's financial system, manufacturing supply chains and much else without anyone being able to explain tangible benefits from a national security perspective.
What are the exemptions for FIRS registration?
Several exemptions exist for each, and, for some, both tiers. These include diplomats acting in their official capacity, certain diplomatic family members, lawyers conducting legal work, recognized news publishers, specific investment activities by sovereign wealth funds and public pension funds, and where the UK government is itself a party to the arrangement with the foreign power.
Preparing for FIRS
Given our deep involvement with FIRS from its initial inclusion in a 2021 consultation, through what Lord Anderson, former Independent Reviewer of Terrorism Legislation, called its "comprehensive evisceration" in the House of Lords which led to various key improvements, we have been working with sovereign wealth funds, international banks and other global businesses as they seek to apply a proportionate approach to these new obligations.
Key preparatory steps may include:
- Assessing the extent of engagement with non-UK government entities and the types of UK activities which may arise
- Updating compliance policies and procedures, including potentially engagement terms
- Training for relevant executives and employees on the types of activities and relationships which may trigger FIRS obligations and which should be flagged for discussion with a core team
- Putting in place a core team with deeper knowledge which can react quickly to questions and concerns from the wider business and take central control of any registrations.
There is an initial grace period for existing arrangements which continue beyond the 1 July 2025, which have until 1 October 2025 to register. Any new arrangements arising after 1 July 2025 just have the 25 or 10 days period applicable respectively to the primary or enhanced tier of FIRS.
What next for FIRS?
We remain hopeful, albeit not for 1 July 2025, that the Home Office will make an exemption relieving those acting for foreign powers in an overt manner (ie, where the policymaker explicitly knows the identity of the foreign power the communicator is representing). This exemption already applies for the primary tier to public communications, where "it is reasonably clear that the communication is made at the direction of the foreign principal". An extension would have reduced the risk of criminalising innocent behaviour (including potentially of MPs and peers) and been consistent with the Government's stated aim to prevent malign covert activity.
Similarly, an exemption for purely commercial or administrative activities would be welcome.
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