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New UK government proposals for a US-style register of “foreign influence” damage Britain’s reputation as a global investment hub and will unnecessarily criminalize bank employees, academics and charities, a lobby group has warned.
The proposed foreign influence registration plan is expected to become law as part of a new national security bill aimed at preventing bad foreign actors like Russia and China from meddling in elections and stealing sensitive academic research.
But the City of London and legal and academic groups have warned that the Home Office scheme, which requires a wide range of foreign entities or their UK representatives to register with the Home Office, is drawn too broadly and risks becoming a bureaucratic disaster.
TheCityUK, a lobby group for financial and professional services, has demanded an urgent meeting with Security Minister Tom Tugendhat after its members expressed “widespread concern” that the proposals would have a chilling effect on legitimate interactions between the UK and foreign interests.
In a letter to Tugendhat seen by the Financial Times, Miles Sellick, the group’s chief executive, said the registration regime “seriously harms the UK’s financial and related professional services industry, as well as our reputation as one of the most attractive jurisdictions in the world. Cross-border trade, trade and destinations for foreign investment.”
The plan – hastily added to the national security bill by former Home Secretary Priti Patel after the Russian invasion of Ukraine – is loosely modeled on similar laws in the US and Australia, but legal analysts said it was far beyond its scope.
James Palmer, partner at law firm Herbert Smith Freehills, said in a briefing note to clients that the proposed plan was “one of the most fundamentally misconceived and ill-focused we have ever seen.”
He added that, unless amended, it would have the effect of “bureaucratizing almost all global engagement with the UK” while criminalizing “an almost unlimited range of individuals, charities, academics, businesses and other organisations”.
The register was recommended by the House of Commons Intelligence and Security Committee following a 2020 report on Russian-influenced activities, but the bill was acted on by the House of Commons at a late stage in its progress, leaving little time for scrutiny.
The register requires any foreign entity, whether a government or corporation – or its designated representative in the UK – to register with the Home Office if they intend to carry out “political influence activities”.
Herbert Smith Freehills said the UK law was “an order of magnitude more intrusive” than its Australian counterpart with exemptions for charities, aid organisations, MPs, religious groups and industry and arts organisations.
For example, it warned that visiting academics attending health conferences in the UK and engaging with policymakers, including ministers and peers, could find themselves criminalized if they failed to register and were later questioned by their bank’s compliance department.
The plan was heavily criticized in the Lords this month, with peers warning that the proposals needed urgent clarification. Liberal Democrat Baroness Ludford said the plan had “huge flaws” and threatened to become a “bureaucratic monster”.
UK universities collaborating internationally have also raised concerns about the proposals, which would duplicate existing safeguards designed to ensure that academic collaboration does not result in the illegal transfer of technology to hostile foreign powers.
Tim Bradshaw, head of the Russell Group of leading UK research universities, said the group was “concerned” about the proposals and was calling for targeted exemptions where research was already covered by other legislation such as the National Security and Investment Act.
“We are concerned that the current proposals will duplicate existing measures and capture many partnerships that have already been investigated. This kind of duplication drains resources and increases the chance of missing real risks,” he said.
TheCityUK declined to comment. The Home Office said covert influence by foreign powers undermined the integrity of UK politics and institutions.
“Openness and transparency are vital in a democracy and the Government is clear that the Foreign Influence Registration Scheme is an important step in tackling covert foreign influence in the UK, in turn supporting the integrity of the City,” added a spokesman.
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