The Foreign Agents Registration Act (FARA) is a United States law passed in 1938 requiring that agents representing the interests of foreign powers be properly identified to the American public. FARA has gained attention in recent years related to charges brought against Paul Manafort and others concerning lobbying efforts related to Ukraine. Understanding FARA and its implications for international investments is important.
FARA focuses on transparency in foreign lobbying
The central purpose of FARA is to ensure transparency in lobbying efforts conducted within the United States on behalf of foreign governments, political parties, or private interests. It requires periodic disclosure filings by agents outlining the nature of lobbying activities, materials disseminated, and funds received. This allows the American public and regulators to understand if and how foreign interests are aiming to influence U.S. government policy.
Most international investments not covered under FARA
Most standard international business and investment activities are exempted from FARA registration requirements. FARA does not apply to tourism and trade promotion, humanitarian fundraising, legal representation, patent and trademark advice, or activities furthering educational, scientific, or cultural exchanges. As such, the vast majority of overseas investments and business operations with no U.S. lobbying component have no FARA compliance obligations.
Awareness of UFLPA and EU forced labor regulations rising
However, multinational companies do need to be aware of emerging laws concerning forced labor in supply chains, such as the Uyghur Forced Labor Prevention Act (UFLPA) in the U.S. and upcoming EU regulations. While not directly related to FARA, these laws aim to add transparency around labor conditions. Firms with complex supply chains need to ensure they are not exposed to forced labor risks that could jeopardize market access.
In summary, FARA creates transparency requirements primarily around foreign lobbying efforts within the U.S., but most international business and investments not involving lobbying have no FARA obligations. However, new laws around supply chain transparency are emerging rapidly.