What do foreign firms need to know about U.S. PR firms and the Federal Foreign Agent Registration Act?

PR firms representing foreign principals are obligated to register with the FARA.

A person filling out paperwork. It’s normal to find public relations agencies in the U.S. representing foreign entities. The Foreign Agents Registration Act of 1938 (FARA) is a law that promotes transparency with respect to foreign influence in the U.S. The act ensures the government and public are aware of information from foreign agents, in turn allowing for both parties to make informed assessments and decisions.

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The act mandates that PR agencies (and other bodies) engaging on behalf of a foreign principal register with and disclose such activities to the Department of Justice.

This post details the implications of the FARA and what foreign principals should expect from their PR firms in the U.S.

Foreign firms using FARA

Currently, there are questions about when PR firms representing foreign principals should register. This comes as a result from a U.S. PR firm, which had LIV Golf as a client, recently filing as a foreign agent under FARA. This move disputes the opinion of LIV Gold, the firm’s now-former client, that the firm shouldn’t register since the golf tour is a foreign commercial venture and doesn’t advance Saudi Arabia’s political interests.

However, the PR agency registered under FARA upon discovering the Saudi Public Investment Fund financed LIV and occasionally supervised its PR activities. Now, we have to ask: when should PR firms representing foreign principals register under FARA?

Implications of the Foreign Agent Registration Act

With uncertainty in the air, it’s imperative to highlight what foreign clients should be aware of concerning U.S. PR firms, foreign relations, and federal law.

First, the FARA identifies whether a PR firm provides its services “for or in the interest of a foreign entity.” In these cases, such an agency counts as an “agent of a foreign principal” and is mandated to register under the Act. Eventually, a PR firm could fail to register simply due to inaction or unawareness of the status of its client.

Failure to register attracts certain penalties including:

Imprisonment for up to five years, a fine of up to $250,000, or both for failure to register, making a false statement of fact, or for making a willful omission of a material fact or document
Imprisonment for up to six months, a fine of up to $5,000, or both if it involves failure to properly label informational materials, correcting deficiencies in registrations, or providing adequate disclosure to Congress or other federal agencies
An injunction requiring registration under the Act or correcting a defective registration statement where applicable

In the event that the PR firm only supported “private and nonpolitical activities in furtherance of a bonafide trade or commerce” or engaged “in other activities not serving predominantly a foreign interest,” the firm would not need to register. This is because in this instance, it comes under exceptions to the act.

A transparent relationship between a foreign client and a firm is necessary

Foreign clients must also understand PR firms have a responsibility to identify how clients operate. So, foreign clients should expect questions relating to the major decision makers of their companies along with their sources of funding. This will help the PR agencies spell out the terms of their contract at the initial stage.

PR firms should explain the essence of their inquiries to their clients. Likewise, foreign principals should not withhold any relevant bit of information.

Should the client claim to function separately and independently of their foreign owners and investors, they won’t identify as foreign principals; this status will be made clear in the contract. However, if a PR firm finds this to not be the case, they’re obligated to make it clear to the client and comply with the legal requirement of registering with the FARA.

Utter transparency and good faith between PR agencies and foreign principals is imperative. It ensures both parties are on the same page and also helps the PR firms meet the legal requirement of registering with the FARA.

PR agencies must operate within the confines of the law. Find out more about the media laws that regulate journalism.