2. Scheme establishment and operation

Overview of the scheme

Purpose of the scheme

2.1As outlined in Chapter 1, the Foreign Influence Transparency Scheme (FITS) was introduced as a mechanism to allow for public scrutiny of the actions of people or organisations that could influence Australian government or politics.

2.2This purpose was further explained by Mr Simon Newnham, Deputy Secretary, Integrity and International Group, Attorney-General’s Department (the Department):

In our open, democratic society the government welcomes contributions from a wide range of perspectives, including from members of the international community. However, the government also recognises that influence activities undertaken on behalf of foreign governments in a non-transparent manner can result in foreign interests being prioritised over the interests of Australian citizens and Australian residents, and this in turn can erode public confidence in Australia's political and government institutions.[1]

2.3If a person or an organisation is exercising influence within Australia on behalf of a foreign government or political organisation (or related entities or individuals), the intent of the FITS is to ensure that those activities are registered and transparent.

2.4The public register created by the FITS Act is central to this purpose. The Department emphasised this:

The public register established by the FITS Act is the key mechanism for providing this visibility of foreign influence and serves a dual purpose. In addition to being a publicly searchable list available to decision-makers and the general public, the register also acts as a central repository of information on foreign influence in Australia at the federal level. It casts light on the types of entities and foreign principals that seek to influence political processes in Australia, and the activities they carry out to achieve this purpose. In this way, the register has the potential to be a valuable tool for understanding emerging trends in foreign influence and changes over time. While some information or relationships about an [entity’s] connection to a foreign principal may be already be publicly available, for example, via an [entity’s] publicly listed website, there is utility in this information being easily accessible in a central location.[2]

2.5This register allows for visibility of declared and disclosed influence. Those parties that choose not to disclose their influence activities, or even interference activities, will then, in theory, attract the attention of authorities and the potential for enforcement action, including criminal penalties.

2.6Ms Katherine Mansted from the National Security College at the Australian National University provides an overview of the traditional elements of foreign influence:

Countries seek to influence their allies as well as their competitors and adversaries in a range of domains—including diplomatic, economic, informational and military. There are three broad categories of influence: coercion (such as armed aggression or economic sanctions), inducement (such as concessional loans or elite cultivation) and persuasion (such as cultural exchange or, more perniciously, propaganda and disinformation). Arguably, all interactions between states are ultimately in pursuit of influence.

…“foreign influence” – that is, influence activities that target, or otherwise affect, a country’s domestic sphere, including:

• political institutions and actors
• economic institutions and private sector actors, and
• civil society groups and citizens.[3]
  7. The FITS is currently legislatively cast directly at the first set of targets identified above (political institutions and actors).

FITS as part of the Countering Foreign Interference framework

2.8Figure 2.1 below, provided in the Department’s primary submission, tabulated the role that the FITS performs in recording engagement with Australian democratic institutions and machinery, and how this relates to the broader framework for countering foreign interference (CFI) within Australia.

Source: Attorney-General’s Department, Submission 2, p. 5.

2.9The Department of Home Affairs submitted that it ‘…considers the FITS Act to be a vital supporting element of the overall national approach to countering foreign interference’,[4] and provided the Committee with its working definitions of both foreign influence and foreign interference:

Foreign influence:

Open and transparent activities to advocate for particular outcomes or shape the consideration of issues important to foreign actors. When conducted in an open and transparent manner, these activities can contribute positively to public debate.

Foreign interference:

Activity carried out by, or on behalf, of a foreign actor, which is

• coercive, deceptive, clandestine or corrupting, and is
• contrary to Australia’s sovereignty, values and national interests.[5]
  10. The Department of Home Affairs outlined the key elements of the Government’s CFI strategy:

The CFI Strategy includes 5 pillars aimed at enhancing capability, engaging with at-risk sectors, deterring perpetrators, defending against acts of foreign interference, and enforcing counter foreign interference laws.

These 5 pillars are:

• enhance capability to meet current and future needs
• engage at-risk sectors to raise awareness and develop mitigation strategies
• deter the perpetrators by building resilience in Australian society
• defend directly against foreign interference activity through a coordinated government response
• enforce our CFI laws, by investigating and prosecuting breaches.[6]
  11. The Australian Security Intelligence Organisation (ASIO) highlighted that foreign influence activity may be a camouflage for more malicious intent, making the delineation between influence and interference less than clear:

Foreign influence activities, when undertaken openly and transparently, are distinct from foreign interference and can be a normal part of statecraft.

ASIO is not directly concerned with foreign influence, and the investigation of foreign influence activities is not a part of our statutory functions.

There are circumstances, however, in which people and organisations can use seemingly legitimate foreign influence activities as cover to engage in security-relevant activities on behalf of foreign powers, for example, by:

• using access gained in the course of legitimate foreign influence activity to simultaneously or subsequently seek to engage in acts of foreign interference and shape the views of members of the Australian public, government officials, or members of diaspora communities, to advance the interests of a foreign power to the detriment of Australia and our national interests;
• leveraging contacts and associations developed through legitimate foreign influence activities to build relationships with officials, members of industry and others who have access to privileged or confidential information, that can be exploited for espionage purposes.

Measures that promote transparency around foreign influence activities, such as the FITS Act, can assist to reduce the opportunities for foreign powers to work through proxies and intermediaries in these ways. These measures can also provide ASIO with insights into where foreign governments may be focusing their efforts in Australia. [7]

2.12Commentary has been made regarding the difficulty in identifying the boundary between foreign influence and foreign interference. The Department of Home Affairs acknowledged that:

The line between influence – which if conducted transparently and openly is a hallmark of a vibrant democracy – and interference is not always starkly drawn. An assessment of context, purpose, threat and risk is central to determining whether an activity or interaction is one about which participants should be concerned.[8]

2.13In ASIO’s Annual Threat Assessment for 2022, the Director-General Security made the following comments regarding where foreign influence can transition into interference:

The confusion about where legitimate influence stops and foreign interference begins is understandable. We see our targets engaging in both things, and foreign interference is clandestine, and therefore difficult to discern.

Publicly praising a foreign regime—even an odious one—is not interference.

Transparently lobbying on behalf of a foreign government is not interference.

Diplomacy is not interference. These things are routine acts of statecraft.

But any and all of these acts could become foreign interference if they involve the hidden hand of a foreign state and are contrary to Australia’s interests. If the person publicly praising another country is doing so because they’ve received discreet instructions from an overseas government, it could constitute foreign interference if it’s detrimental to Australia’s interests or done to affect our political processes.[9]

2.14Ms Mansted has written about a ‘grey zone’ between these two concepts:

…a ‘grey zone’ is emerging between acceptable foreign influence activities and unlawful foreign interference…how should Australia address foreign influence that falls short of interference, but is nonetheless inconsistent with Australian values, interests or sovereignty?[10]

2.15More evidence and commentary regarding this ‘grey zone’ is outlined in Chapter 3.

FITS’ interaction with the Government Register of Lobbyists and the Foreign Arrangements Scheme

2.16The Department’s primary submission also acknowledged the Australian Government Lobbying Code of Conduct (the Code) and the Australian Government Register of Lobbyists, administered by the same area of the Department, and that entities may be obliged to register on either or both of the lobbyists’ register and the FITS.[11]

2.17The Code differs in its scope and purpose, applying to any and all activities of a lobbyist (as defined in the Code), whether on behalf of a foreign principal or not.[12] This wider scope is reflective of the purpose of the Code, being a transparency mechanism to ensure that all (not just foreign) influence on Ministers, their staff and senior Government officials is ethical and open to scrutiny.[13]

2.18The existence of the FITS alongside the Code, as well as the CFI legislation, can potentially create a situation where an individual or organisation must register for both the FITS and the Code, as well as being considered in relation to the wider CFI framework.

2.19The Department acknowledged this potential overlap and advised that it considers this when administering both the FITS and lobbyist schemes[14], which is an obvious benefit of having both administered by the one agency.

2.20Further, some universities that submitted to the review identified potential overlap or confusion between the FITS and the Foreign Arrangements Scheme (FAS) introduced by the Foreign Relations (State and Territory Arrangements) Act 2020.[15] The FAS is administered by the Department of Foreign Affairs and Trade (DFAT).

2.21The FAS requires notification of arrangements between State or Territory entities and foreign entities, and ministerial approval of such arrangements between certain ‘core’ entities.

2.22University submitters argue that the inclusion of public universities in the definition of a State or Territory entity creates a situation where an individual involved with a university or the university itself may be required to register activity under the FITS as well as under the FAS, though universities also submitted that this interaction is less than clear.

2.23This potential for duplication, and other concerns raised by higher education providers, are discussed further in Chapter3.

Influences on development of the FITS

2.24As was extensively referenced in the former Committee’s report on the FITS Bill, the original design of the FITS, as reflected in the initial 2017 Bill, was broadly based on the Foreign Agents Registration Act 1938 (US) (FARA), a statute in the United States of America (US) that promotes transparency of foreign influence by foreign principals on the political process within that country.

2.25Like the FITS, the FARA requires registration and reporting of foreign influence activities to the US Department of Justice.[16]

2.26The FARA ‘takes a broad approach to the entities considered a foreign principal and the relationships which constitute acting on a foreign principal’s behalf’.[17] The original FITS Bill proposed a similar scope, with a broad definition of a foreign principal, allowing for the capture of a wide range of activities by individuals, companies and governments.

2.27However, as a result of the recommendations of the Bill inquiry conducted by the former Committee, the Bill was amended to narrow its application before being passed by Parliament. More specifically:

• The definition of foreign principal was narrowed from including all foreign businesses, individuals, and foreign public enterprises, to the currently defined concepts of foreign government related entities and individuals, as well as foreign governments and foreign political organisations.
• The scope of activities that require registration was narrowed to exclude activities undertaken with funding or supervision by a foreign principal or in collaboration with a foreign principal.
• Exemptions were expanded.
• Transparency notices were added (as outlined later in this Chapter).[18]

Overview of the FITS Act

2.28The FITS Act consists of six Parts:

• Part 1 contains the Preliminary provisions, definitions and provisions regarding transparency notices that can be issued to declare a person to be a foreign government related individual or entity when they have failed to register as such.
• Part 2 contains provisions related to the requirement to register activities, what those activities are, exemptions, and the particulars of ending registration of a person.
• Part 3 outlines responsibilities of a person once registered – reporting material changes, disbursement activities, activities during voting periods, and disclosure of communications activity, renewals of registration and recordkeeping.
• Part 4 outlines the requirements for the Department in maintaining the register, requesting and compelling information that can be made publicly available in certain circumstances, as well as the requirement for secrecy and appropriate handling of information.
• Part 5 outlines the enforcement provisions of the Act.
• Part 6 contains the miscellaneous provisions of the Act, including the requirement for this statutory review in section 70.[19]
  29. As highlighted in Chapter 1, the concept of ‘foreign influence’ is not directly defined in the FITS Act, which instead captures influence by specifying activities taken on behalf of a foreign principal that require registration.

Requirements on registrants

2.30The FITS Act requires people and organisations who undertake registrable activities on behalf of a foreign principal for the purpose of political or governmental influence, to register these details on the public register hosted by the Department. More detail on the register is outlined later in this chapter.

2.31Registrable activities[20] include:

• Lobbying of members of Parliament on behalf of a foreign principal, regardless of whether the ultimate purpose of the lobbying is political or governmental influence;
• general political lobbying (not defined specifically in the Act);
• communications activity (defined at section 13 of the Act); and
• disbursement activity (being disbursement of money of things of value that is not already required to be disclosed under the Commonwealth Electoral Act 1918).
  32. The identity of the person undertaking the activity and the identity of the foreign principal can influence whether the activity is registrable. Former Cabinet Ministers and designated position holders (including Members of Parliament, Commonwealth agency heads, Ambassadors and High Commissioners) are required to register if they act on behalf of a foreign principal within certain time periods after leaving their public role.
  33. Activities conducted on behalf of a foreign principal are defined as those:
• under an arrangement with the foreign principal;
• in the service of the foreign principal;
• on the order or at the request of the foreign principal; or
• under the direction of the foreign principal.[21]

Foreign principals

2.34For the purposes of determining whether a person is undertaking an activity on behalf of a foreign principal, the entities that are included are:

• foreign governments;
• foreign political organisations;
• foreign government related entities; or
• foreign government related individuals.[22]
  35. All of these entities are defined in section 10 of the FITS Act. They may be located in Australia and operating within the country, or extraterritorially.
  36. The definitions of these entities are a mixture of direct institutional identifiers, ‘including’ example definitions, and very complex relationship or action tests. The precise definitions are:

foreign governmentmeans:

(a) the government of a foreign country or of part of a foreign country; or

(b)an authority of the government of a foreign country; or

(c)an authority of the government of part of a foreign country; or

(d)a foreign local government body or foreign regional government body.

foreign politicalorganisation includes:

(a)a foreign political party; and

(b)a foreign organisation that exists primarily to pursue political objectives.

foreign government related entity means a person, other than an individual, who is related to a foreign principal that is a foreign government or a foreign political organisation in one or more of the following ways:

(a)if the person is a company—one or more of the following applies:

(i) the foreign principal holds more than 15% of the issued share capital of the company;

(ii)the foreign principal holds more than 15% of the voting power in the company;

(iii)the foreign principal is in a position to appoint at least 20% of the company’s board of directors;

(iv)the directors (however described) of the company are accustomed, or under an obligation (whether formal or informal), to act in accordance with the directions, instructions or wishes of the foreign principal;

(v)the foreign principal is in a position to exercise, in any other way, total or substantial control over the company;

(b)if the person is not a company—either of the following applies:

(i)the members of the executive committee (however described) of the person are accustomed, or under an obligation (whether formal or informal), to act in accordance with the directions, instructions or wishes of the foreign principal;

(ii)the foreign principal is in a position to exercise, in any other way, total or substantial control over the person;

(c)if the person is a person other than a body politic and the foreign principal is a foreign political organisation:

(i)a director, officer or employee of the person, or any part of the person, is required to be a member or part (however described) of that foreign political organisation; and

(ii)that requirement is contained in a law, or in the constitution, rules or other governing documents by which the person is constituted or according to which the person operates.

Note:A transparency notice issued under Division 3 of this Part may state that a person is a foreign government related entity.

foreign government related individual means an individual:

(a)who is neither an Australian citizen nor a permanent Australian resident; and

(b)who is related to a foreign principal that is a foreign government, foreign government related entity or foreign political organisation in either or both of the following ways:

(i)the individual is accustomed, or under an obligation (whether formal or informal), to act in accordance with the directions, instructions or wishes of the foreign principal;

(ii)the foreign principal is in a position to exercise, in any other way, total or substantial control over the individual.

Note:A transparency notice issued under Division 3 of this Part may state that a person is a foreign government related individual.[23]

Political or government influence

2.37A central threshold element for registrable activity is whether the activity is intended to exert political or government influence.

2.38Section 12 of the FITS Act outlines detailed circumstances and processes which can be considered the potential target of influence, including examples.[24] The Department provided the following summary:

An activity is considered to be for the purpose of political or governmental influence if the sole, primary, or a substantial purpose of the activity is to influence a process relating to the federal political system (such as an election, the proceedings of Parliament, or a government decision). An activity can also be for the purpose of political or government influence if it aims to influence the public (or a section of the public) in relation to these processes.[25]

2.39In addition to understanding the scope of activities or conduct that requires registration, the FITS Act imposes requirements on registrants to report material changes in their circumstances (section 34), any disbursement activity (section 35), and to disclose of certain communications activity (section 38).

2.40These requirements are also enlivened at the start of an election or voting period (sections 36 and 37) with shortened reporting timeframes (seven days instead of 14).

Exemptions

2.41The FITS Act sets out a range of exemptions for certain persons or activities that commonly involve arrangements with foreign principals.

2.42Part 2 Division 4 of the FITS Act outlines the exemptions that apply, either when the identity of the relevant foreign principal is apparent or disclosed, or when the nature of the entity, person or activity aligns with the specific circumstances of the exemption.

2.43In summary, exemptions are provided in relation to the following:

• Section 24 – humanitarian aid or assistance
• Section 25 – legal advice or representation. This exemption does not cover all the activities that could be undertaken by a legal practitioner on behalf of a foreign principal and is generally intended to extend only to activities which would be protected by legal professional privilege.Lawyers who undertake other registrable activities on behalf of a foreign principal, such as parliamentary lobbying, may need to register.
• Section 25A – members of Parliament and statutory office holders – this exemption applies where a person is undertaking a registrable activity on behalf of a foreign principal and, while the activity is being undertaken, the person holds a position or appointment as:

• a member of the Australian Parliament
• a member of a state Parliament or territory Legislative Assembly, or
• an office bearer under a law of the Commonwealth, state or territory.

• Section 26 – diplomatic, consular or similar activities. The activity must be related to the functions that entitle the person to diplomatic privileges and immunities under relevant Australian laws.
• Section 27 – religion – where a person is undertaking a formal religious activity on behalf of a foreign principal and that activity is undertaken in good faith, and consistent with the principles or beliefs of the religion.
• Section 29 – foreign government employees and commercial or business pursuits (directors and employees of a foreign government related entity). This exemption does not apply to former Cabinet ministers or recent designated position holders.
• Section 29A – industry representative bodies – this exemption covers circumstances where a registrable activity is undertaken in the course of representing the collective interests of members (both foreign and domestic) of an Australian industry representative body. The exemption does not apply to representative groups which are foreign entities or where the membership does not include Australian entities.
• Section 29B – personal representations in government administrative processes – this exemption applies to individuals who make representations on behalf of a foreign principal in relation to a government administrative process that involves the foreign principal or matters affecting the personal welfare of the foreign principal. The exemption only applies to a foreign principal who is an individual and when:

• the person is a family member of the foreign principal or knows the foreign principal personally; or
• the person is undertaking the activity because of their personal association with the foreign principal;

and:

• the activity is undertaken in a personal capacity and not a professional capacity; or
• the registrable activity is, or primarily relates to, representing the interests of the foreign principal.

• Section 29C – registered charities – this exemption applies to registered charities that undertake certain registrable activities on behalf of a foreign principal in pursuit of the charity’s purpose. This exemption only applies to parliamentary lobbying, general political lobbying and communications activities. It does not apply to disbursement activities. The exemption only applies when:

• the person or entity is a registered charity under the Australian Charities and Not-for-profits Commission Act 2012;
• the registrable activity is in pursuit of the registered charity’s charitable purpose within the specific meaning of Part 3 of the Charities Act 2013; and
• at the time the activity is undertaken, both of the following are apparent or disclosed:

‒that the activity is being undertaken on behalf of a foreign principal; and

‒the identity of the foreign principal.

• Section 29D – artistic purposes.[26]
• Section 29E – certain registered organisations – this exemption applies where an association of employees or an enterprise association that is registered under the Fair Work (Registered Organisations) Act 2009 undertakes a registrable activity on behalf of a foreign principal. This exemption only applies to parliamentary lobbying and general political lobbying. It does not apply to communication activity or disbursement activity.
• Section 29F – activities of members of certain professions. This exemption applies where a tax agent, a customs broker or a liquidator or receiver undertakes a registrable activity on behalf of a foreign principal in the usual course of undertaking their profession.
• Section 30 – prescribed circumstances. As prescribed in Part 2 of the Foreign Influence Transparency Scheme Rules 2018,two prescribed circumstances are currently exempt:

• employees and contractors engaged under the Members of Parliament (Staff) Act 1984 and Commonwealth public officials, where:

‒the person undertakes a registrable activity within the scope of the person’s ordinary or usual duties; and

‒at the time the activity is undertaken the identity of the foreign principal is made apparent or is disclosed to all persons with whom the person is dealing.

• persons engaging in a government decision-making process as required by law. This exemption applies where a person is undertaking general political lobbying on behalf of a foreign principal for the purpose of political or governmental influence, and the activity relates to a government decision‑making process in which the foreign principal is required by law to participate. In addition, it is limited to what is necessary for the foreign principal or the person to comply with the legal requirements – for example, the making of an application.
  44. Issues raised in evidence in relation to the exemptions are discussed in Chapter 3.

Departmental administrative obligations

Public register, record keeping and information sharing

2.45The Secretary of the Department is required to keep a register of information obtained under the FITS (section 42), with certain information being made public on the register accessible on the Department’s website (section 43).[27]

2.46The publicly available information includes the names of registrants, former registrants, foreign principals, and descriptions of the registrable activities being undertaken.

2.47The Secretary of the Department is also required to make publicly available any transparency notices issued under section 14B of the FITS Act (subsection 43(2A)). More information regarding these notices is outlined below.

2.48Under section 53 of the FITS Act the Secretary of the Department can share information that has been obtained under the FITS that is not normally publicly available with certain other entities, for specified purposes. This includes, for example, sharing information with an Australian police force for enforcement-related activities, or the protection of security as defined under the Australian Security Intelligence Organisation Act 1979 (the ASIO Act).[28]

Compliance and enforcement powers

2.49In order for the FITS to be able to compel registrants or people that are expected to be required to register activities but who have not, the FITS Act includes three different kinds of notice that the Secretary of the Department can issue.

Transparency notices

2.50Transparency notices are issued under Division 3 of Part 1 of the FITS Act. These were included in the Act as a result of proposed amendments put forward during the former Committee’s inquiry into the FITS Bill and supported in Recommendation 43 of the Committee’s report.

2.51The Department explained that:

Transparency notices are public notices that declare a person to be a foreign government related individual or entity. Transparency notices are intended to provide the public with certainty that a person or entity is a foreign principal for the purposes of the FITS Act, and alert them that registration obligations may arise for activities conducted on their behalf. Transparency notices can also serve as a compliance tool. The Secretary may declare that the entity or individual is related to a foreign government where they have sought to conceal the nature of their relationship with a foreign government or foreign political organisation.[29]

2.52Where the Secretary of the Department is satisfied that a person or organisation is a foreign government related individual or entity, Division 1 of Part 3 of the Act requires the Secretary to first issue a ‘provisional transparency notice’, and to give the named entity an opportunity to make a submission in response to the provisional notice. The Secretary may then vary or revoke the notice on consideration of the submission—but if not revoked within 28 days, the provisional notice becomes final.

2.53The provision for publication of (provisional and final) transparency notices issued under the FITS recognised ‘…that it may be more difficult to ascertain which entities and individuals were within the new definition of ‘foreign principal’’[30] under the Act, and aims to provide clarity where needed, in order to compel registration.

2.54Since the commencement of the FITS Act two transparency notices have been issued. The first, provisional notice, was issued to The Confucius Institute at the University of Sydney in February 2021[31], but was revoked one month later, with the Department stating that:

Following consideration of changes made to the Confucius Institute’s governance arrangements after the provisional transparency notice was issued, the Acting Secretary was no longer satisfied, on the information available, that the Institute meets the definition of a foreign government related entity under the Foreign Influence Transparency Scheme Act 2018 at this time.[32]

2.55On 9 January 2023 a second provisional transparency notice was issued, to the Australian Council for the Promotion of Peaceful Reunification of China (ACPPRC) Incorporated. This notice was made final on 6 February 2023.[33]

Information gathering notices

2.56Information gathering notices can be issued under sections 45 and 46 of the FITS Act and are an important procedural and administrative tool to allow the Department to gather the relevant information for the FITS to operate as intended.

2.57Where the Secretary of the Department reasonably suspects that a person might be liable to register under the FITS, the Secretary can issue a section 45 information gathering notice requiring a person to produce documents to satisfy the Secretary as to whether they are required to register under the FITS.

2.58Where the Secretary of the Department reasonably suspects that a person has information relevant to the operation of the scheme, the Secretary can issue a section 46 information gathering notice requiring that person to provide that information.

2.59Since the FITS Act commenced on 10 December 2018, five information gathering notices have been issued under section 45, and 19 information gathering notices have been issued under section 46.[34]

Criminal offences under the FITS Act

2.60The FITS Act includes offence provisions for failures to comply with obligations or requirements.

2.61Section 57 establishes differing tiers of criminal offence for a person who is liable to register, but who has not registered under the Scheme, or who fails to renew their registration:

• Intentional or reckless omission to apply or renew whether or not registrable activity undertaken – 12 months imprisonment;
• Reckless omission to apply or renew reckless as to whether required to do so, and registrable activity undertaken – two years imprisonment;
• Reckless omission to apply or renew knowing required to do so, and registrable activity undertaken, or intentional omission to apply or renew reckless as to whether required to do so, and registrable activity undertaken – three years imprisonment; and
• Intentional omission to apply or renew knowing required to do so, and registrable activity undertaken – five years imprisonment.
  62. Criminal offences also apply under section 57A for the giving of a notice of end of liability to register under section 31 of the FITS Act when a person is still liable to register, with similar tiering of penalty from six months to five years imprisonment.
  63. Offences also exist under section 59 for failing to fulfil reporting and disclosure responsibilities under the FITS. It is a criminal offence under section 59 to not comply with a notice from the Secretary requiring information. Providing false or misleading information is an offence under section 60 (with defined defences). It is also an offence under section 61 for a person to destroy records required to be kept as an obligation under the FITS.
  64. As at the time of this report, no potential criminal offences had been referred for prosecution under the FITS Act.

Operation of the FITS to date

2.65The Department provided an overview of the implementation of the FITS up to November 2021 in its initial submission to the Committee,[35] and updated this in private briefings to the Committee in December 2021 and again in October 2022. Some further information was provided to the Committee at the public hearing conducted on 21 February 2023.

2.66In addition, the Department is required under section 69 of the FITS Act to prepare an annual report on the operation of the FITS for each financial year. These annual reports highlight the activities undertaken for the FITS and compliance, or otherwise, over time.[36]

2.67The following summarises the operation of the FITS as reported by the Department, to the date of this report.

Registrations

2.68The Department advised in its November 2021 submission that:

Since the commencement of the Scheme, a total of 95 individuals and entities have registered, covering 358 activities on behalf of 171 different foreign principals from 40 jurisdictions (as at 12 November 2021). The number of registrations since the Scheme’s introduction have remained constant each year with the department receiving:

• 38 registrations between December 2018 and June 2019, reflecting 144 activities undertaken on behalf of 70 different foreign principals, associated with 26 foreign jurisdictions,
• 54 registrations between July 2019 and June 2020 (including 26 registration renewals), reflecting 190 activities undertaken on behalf of 94 different foreign principals, associated with 32 foreign jurisdictions, and
• 59 registrations between July 2020 and June 2021 (including 34 registration renewals), reflecting 219 activities undertaken on behalf of 114 different foreign principals, associated with 34 foreign jurisdictions.

The highest numbers of registrable activities reported each year in Australia since the Scheme’s introduction are associated with foreign principals connected to China, followed by Japan and the United States.[37]

2.69These figures were updated and expanded on by the Department at the Committee’s public hearing on 21 February 2023:

To date, again as at 1 February, there have been a total of 106 individuals and entities registered, covering 476 activities on behalf of 229 foreign principals related to 44 jurisdictions. We've undertaken more than 25 preliminary assessments and more than 30 investigations, leading the secretary to issue 24 information-gathering notices and two provisional transparency notices declaring organisations to be foreign government related entities, one of which became a final transparency notice.[38]

2.70The FITS register can be viewed at any time on the Department’s website, to provide an interested party with details of current registrants and relevant foreign principals. As at 1 February 2024 there were 127 registrants on the public register, with 361 listed foreign principals (112 active), and 560 entries for activities undertaken on behalf of a foreign principal.[39]There are a number of multiple entries for the same entities on the register.

2.71There has been a low number of registrations in the operation of the FITS to date.

2.72Other statistics regarding documents produced or information shared under the FITS are available in the scheme’s annual reports on the website.[40]

Compliance and enforcement activity

2.73As noted in the relevant sections above, to date:

• two provisional transparency notices have been issued, one of which was revoked and the other made final;
• a total of 24 information gathering notices have been issued; and
• no criminal prosecutions have been undertaken for offences under the FITS Act.

Comparable international schemes

2.74Australia’s FITS legislation drew from, but sought to refine, the older FARA scheme in place in the United States. Ms Katherine Mansted described Australia as ‘a global first mover in updating its legislation, policy and bureaucratic structure to manage foreign influence risk in the 21st century’.[41] The FITS has in turn influenced the consideration or development of foreign influence schemes in other countries, including the United Kingdom.

United States of America

2.75The FARA is the longest established regime aimed at transparency of influence exerted by foreign principals on government or politics.

2.76The FARA requires the registration of, and disclosure by, an agent of a foreign principal (referred to as ‘agents’) who, either directly or through another person, within the United States:

1engages in “political activities” on behalf of a foreign principal;

2acts as a foreign principal’s public relations counsel,publicity agent,information-service employee,orpolitical consultant;

3solicits, collects, disburses, or dispenses contributions, loans, money, or other things ofvaluefor or in the interest of a foreign principal; or

4represents the interests of theforeign principalbefore anyagencyor official of the US government.[42]

2.77In addition, the FARA requires agents to conspicuously label ‘informational materials’ disseminated or published within the US for or in the interest of a foreign principal.This requirement allows for easy identification of material created by a registered agent.

2.78There are some exemptions to FARA’s registration and labelling requirements for specified categories of agents and activities. Advisory opinions on whether an action or event is covered under the FARA are available from the Department of Justice upon application by an interested individual or party.[43]

United Kingdom

2.79In late 2022 the United Kingdom Home Office announced that legislation to create the Foreign Influence Registration Scheme (UK FIRS) was being introduced to the UK Parliament.[44] Part 3 of the 2022 National Security Bill proposed the creation of the UK FIRS.[45]

2.80Much like the FITS, the UK FIRS has what is described as a ‘primary tier’, or political influence tier, of requirements that:

…require the registration of political influence activities within the UK at the direction of a foreign power or entity. The person would need to declare who they are in an arrangement with, what activity they have been directed to undertake, and when the arrangement was made. They must do this within 10 days of the direction, or in any case, before the activity is carried out. Foreign entities will also be required to register their own political influence activities before carrying them out.

Notable exceptions to those who would need to register include those working for a foreign power in their official capacity, those with diplomatic immunity, those who provide legal services, those working for domestic and foreign news publishers and those in an arrangement to which the UK government, or someone acting for or on behalf of the Crown is party.

The penalty for failing to register, carrying out activities that aren’t registered, providing false or misleading information or any other foreign influence offence is a maximum of 2 years’ imprisonment, a fine or both.[46]

2.81These requirements are similar to those under the FITS, but unlike the FITS, would impose a strict penalty without culpability or recklessness considerations (as outlined for the FITS later in this chapter).

2.82Moreover, the UK FIRS was proposed to have an additional ‘enhanced’ tier of requirements and consequences, allowing:

…the Home Secretary to specify a foreign power or foreign power-controlled entity where necessary to protect the safety or interests of the UK, and with parliamentary approval, make it an offence for anyone to carry out any activity in the UK at their direction without it being registered. There is no restriction on which states could be named, to enable the UK to respond to emerging threats from any foreign power. The penalty for these offences is up to 5 years’ imprisonment, a fine or both.

Further powers added to the bill include those to protect UK interests from corrupt financial influence, covered by ‘Powers of arrest and detention.’ This will give investigators powers to monitor a suspect’s account in real-time; identify accounts held by suspects in UK financial institutions; andcompel individuals or organisations to provide relevant information, produce documents and/or answer questions in relation to an investigation into foreign power threat activity. Obtaining a material benefit from a foreign intelligence service will also be made an offence.[47]

2.83This proposed tier for the UK FIRS goes above and beyond the FITS in Australia, incorporating elements of espionage and foreign interference law.

2.84In the Second Reading Speech for the UK Bill the then UK Home Secretary, the Rt Hon Priti Patel MP, acknowledged the influence of the FITS on the development of the UK FIRS, as well as the UK’s identification of shortcomings of the FITS:

I can say to colleagues from the Floor of the House that, having had many discussions directly with our counterparts in Australia over the past 18 months, some aspects of the scheme work, but some do not. It is in our interests to make sure that we get this right. Colleagues need to come together on this. We need to work collectively—not just on the technicalities, but on the legal points. It is the legal application that will matter in terms of making a material difference.[48]

2.85The National Security Act 2023 (UK) received Royal Assent on 11 July 2023 and was indicated to commence in 2024.[49]

Canada

2.86In early 2022 the Canadian Senate began debating a private senator’s bill to establish a Foreign Influence Registry that would operate in a similar fashion to the FITS in Australia. That Bill has not progressed since March 2022.[50]

2.87In December 2022 Canada’s Minister of Public Safety, Marco Mendicino, announced that the Canadian federal government would begin public consultations on the possible creation of a “foreign agent registry”.[51] Consultation on a potential foreign influence transparency registry was launched in May 2023[52], with results released in November 2023.[53]

2.88Media reporting and parliamentary debate in Canada regarding alleged foreign interference in Canada’s 2019 and 2021 federal elections have been seen as a driver of these considerations, and drawn comment from senior intelligence officials regarding the merit of a foreign influence register.[54]

Israel

2.89While not directly targeted at foreign influence exercised by an individual or an entity, the Israeli Parliament created a foreign agent registry in 2016, enacted under the Duty of Disclosure for a Body supported by a Foreign Political Entity (Duty of Disclosure Law).

2.90This law requires non-profit entities who receive funding from foreign political entities to file quarterly reports. These reports must include the identity of the donors, the amount of money contributed, the objective of the donation, and any conditions attached to the funds. The registry also requires any non-profit entity that receives the majority of its funding from a foreign political entity (over the prior fiscal year) to file a report when:

• publishing anything that is publicly accessible, including in television commercials, on the internet, and on billboards;
• making any written request to a public service provider or elected official on issues related to their duties; and
• in any published reports.[55]

Potential improvements to the FITS

The Department’s position

2.91The Department expressed the view that while the FITS has achieved some of its intended purpose to date, the shifting geopolitical and domestic context, especially the intensified public strategic competition between the US and China, may necessitate modification of the FITS to ensure it stays fit for purpose.

2.92In its submissions to this review, the Department provided detailed suggestions on areas for potential improvement in the FITS’ operation and its ability to enhance transparency.

2.93The Department refined its suggestions as the inquiry progressed, but in summary, its proposals for reform focused on:

• Affirming the purpose of the scheme and its ‘country-agnostic’ operation
• Amending the current definitions to remove complexity and to redress limitations that currently prevent the inclusion of relevant foreign entities
• Refining and better targeting the obligations on former public office holders
• Revising the exemptions
• Enhancing the compliance and enforcement framework, with more graduated options (such as public naming of entities) short of criminal prosecution, and improving the transparency notice regime
• Improving technical and administrative provisions.
  94. These proposals are discussed further in Chapter 3.

Strategic review of the FITS

2.95The Committee was also aware during this review that a strategic review of the FITS was commissioned by the Department and undertaken in early 2021 by Mr John Garnaut, senior risk advisor at McgrathNicol.

2.96This review was conducted to assess the operation of the FITS, and identify areas for potential improvement related to targeting of the FITS and its administration and enforcement.

2.97The strategic review report provided to the Committee was classified and is not published. Two versions were made available during this review: a heavily redacted unclassified version, and a subsequent copy classified as PROTECTED with fewer redactions. While the strategic review informed the Committee’s considerations, its classification and the Committee’s partial access to it has limited the extent to which it can be referenced in this report.

2.98As a general summary, the strategic review found that the FITS was not achieving its stated purpose, due to the restraints placed on the Department by the current FITS Act, including the limited scope of activities and entities covered under the current framework.

2.99The review also found that as a tool alongside the overall framework for CFI the FITS achieves some of its intended outcomes, but more demonstrable outcomes of transparency around cases of foreign influence and/or interference have been achieved through investigative journalism and Parliamentary and other inquiries.

Third-party identified improvements

2.100Other submitters to the review provided commentary, suggestions or recommendations to improve the FITS, or for its repeal or complete replacement. Their evidence is discussed in Chapter 3.

Footnotes

[1]Mr Simon Newnham, Deputy Secretary, Integrity and International Group, Attorney-General’s Department, Committee Hansard, Canberra, 21 February 2023, p. 38.

[2]Attorney-General’s Department, Submission 2, pp. 3-4.

[3]Katherine Mansted, Australian National University, National Security College, The Domestic Grey Zone: Navigating the Space Between Foreign Influence and Foreign Interference, February 2021, p. 4, available at https://nsc.crawford.anu.edu.au/sites/default/files/uploads/nsc_crawford_anu_edu_au/2021-02/nsc_foreign_interference_op_2021.pdf

[4]Department of Home Affairs, Submission 12, p. 5.

[5]Department of Home Affairs, Submission 12, p. 4.

[6]Department of Home Affairs, ‘Australia’s Counter Foreign Interference Strategy’, https://www.homeaffairs.gov.au/about-us/our-portfolios/national-security/countering-foreign-interference/cfi-strategy, accessed 28 October 2022.

[7]Australian Security Intelligence Organisation, Submission 5, p. [2].

[8]Department of Home Affairs, Submission 12, p. 3.

[9]Australian Security Intelligence Organisation, ‘Director-General’s Annual Threat Assessment’, 9February 2022, https://www.asio.gov.au/resources/speeches-and-statements/director-generals-annual-threat-assessment-2022, accessed 16 March 2023.

[10]Katherine Mansted, Australian National University, National Security College, The Domestic Grey Zone: Navigating the Space Between Foreign Influence and Foreign Interference, February 2021, p. 1, available at https://nsc.crawford.anu.edu.au/sites/default/files/uploads/nsc_crawford_anu_edu_au/2021-02/nsc_foreign_interference_op_2021.pdf

[11]Attorney-General’s Department, Submission 2, p. 5.

[12]The Lobbying Code of Conduct and more information can be found at https://www.ag.gov.au/integrity/australian-government-register-lobbyists/lobbying-code-conduct, accessed 15 August 2022.

[13]‘Lobbying Code of Conduct’, https://www.ag.gov.au/integrity/publications/lobbying-code-conduct, accessed 1 March 2023.

[14]Attorney-General’s Department, Submission 2, p. 5.

[15]UNSW Sydney, Submission 7; University of Melbourne, Submission 16; Universities Australia, Submission 10; Australian Technology Network of Universities (ATN) and the University of Newcastle, Submission 11.

[16]More detailed information regarding the FARA can be accessed at https://www.justice.gov/nsd-fara

[17]Attorney-General’s Department, Submission 2, p. 8.

[18]A summary of these changes is found in Attorney-General’s Department, Submission 2, pp. 8-9. More detail regarding the recommendations leading to these changes to the original FITS Bill can be found at pp. 247-275 of Advisory Report on the Foreign Influence Transparency Scheme Bill 2017, available at https://www.aph.gov.au/Parliamentary_Business/Committees/Joint/Intelligence_and_Security/TransparencySchemeBill/Report

[19]The full text of the FITS Act in its current compilation can be accessed at https://www.legislation.gov.au/C2018A00063/latest/text

[20]Foreign Influence Transparency Scheme Act 2018, Part 1, Division 3.

[21]Foreign Influence Transparency Scheme Act 2018, s. 11.

[22]Foreign Influence Transparency Scheme Act 2018,s. 10.

[23]Foreign Influence Transparency Scheme Act 2018,s. 10.

[24]Due to the length of this section it will not be replicated here, for further detail refer to Foreign Influence Transparency Scheme Act 2018,s. 12.

[25]Attorney-General’s Department, Submission 2, pp. 6-7.

[26]This exemption only applies to parliamentary lobbying, general political lobbying and communications activities. It does not apply to disbursement activities.

[27]The public register is viewable at https://transparency.ag.gov.au/

[28]Section 53 allows for additional information sharing authorisations to be set out in Rules made by the Minister. Any such Rules are required to be reviewed by the PJCIS.

[29]Attorney-General’s Department, Submission 2, pp. 7-8.

[30]Attorney-General’s Department, Submission 2, p. 9.

[31]Further information can be accessed at https://www.ag.gov.au/integrity/foreign-influence-transparency-scheme/transparency-notices

[32]Revocation of Provisional Transparency Notice issued in relation to the Confucius Institute at the University of Sydney, Attorney-General’s Department, https://www.ag.gov.au/integrity/publications/revocation-provisional-transparency-notice-issued-relation-confucius-institute-university-sydney, accessed 24 August 2022.

[33]Transparency Notice issued in relation to the Australian Council for the Promotion of Peaceful Reunification of China (ACPPRC) Incorporated, Attorney-General’s Department, https://www.ag.gov.au/integrity/publications/transparency-notice-issued-relation-australian-council-promotion-peaceful-reunification-china-acpprc-incorporated, accessed 3 March 2023.

[34]As of end of June 2023.

[35]Attorney-General’s Department, Submission 2, pp. 9-14.

[36]The FITS annual reports can be accessed at https://www.ag.gov.au/integrity/reports-operation-foreign-influence-transparency-scheme

[37]Attorney-General’s Department, Submission 2, p. 10.

[38]Mr Simon Newnham, Deputy Secretary, Integrity and International Group, Attorney-General’s Department, Committee Hansard, Canberra, 21 February 2023, p. 38.

[39]FITS Transparency Register, https://transparency.ag.gov.au/, accessed 1 February 2024.

[40]https://www.ag.gov.au/integrity/reports-operation-foreign-influence-transparency-scheme

[41]Katherine Mansted, Australian National University, National Security College, The Domestic Grey Zone: Navigating the Space Between Foreign Influence and Foreign Interference, February 2021, p. 1, available at https://nsc.crawford.anu.edu.au/sites/default/files/uploads/nsc_crawford_anu_edu_au/2021-02/nsc_foreign_interference_op_2021.pdf

[42]“Background”, US Department of Justice, https://www.justice.gov/nsd-fara/frequently-asked-questions, accessed 19 May 2023.

[43]Further information regarding the FARA is available at https://www.justice.gov/nsd-fara

[44]“Foreign Influence Registration Scheme to make clandestine political activity illegal”, https://www.gov.uk/government/news/foreign-influence-registration-scheme-to-make-clandestine-political-activity-illegal, accessed 10 November 2022.

[45]The version of the Bill prior to Consideration of Amendments stage is available at https://publications.parliament.uk/pa/bills/cbill/58-03/0165/220165v2.pdf

[46]“Foreign Influence Registration Scheme to make clandestine political activity illegal”, https://www.gov.uk/government/news/foreign-influence-registration-scheme-to-make-clandestine-political-activity-illegal, accessed 10 November 2022.

[47]“Foreign Influence Registration Scheme to make clandestine political activity illegal”, https://www.gov.uk/government/news/foreign-influence-registration-scheme-to-make-clandestine-political-activity-illegal, accessed 10 November 2022.

[48]The Rt Hon Priti Patel MP, Home Secretary, UK Parliament, House of Commons Hansard: Volume 715, Column 575, 6 June 2022, available at https://hansard.parliament.uk/commons/2022-06-06/debates/12D4FE61-34CE-4483-BB06-591D9C14C14A/NationalSecurityBill, accessed 11November 2022.

[49]The National Security Act 2023 (UK) can be found at https://www.legislation.gov.uk/ukpga/2023/32/enacted and a factsheet regarding the FIRS can be found at https://www.gov.uk/government/publications/national-security-bill-factsheets/foreign-influence-registration-scheme-factsheet

[50]Further information regarding that Canadian Bill can be found at https://www.parl.ca/legisinfo/en/bill/44-1/s-237

[51]National Newswatch, Liberals to consult public on merits of a foreign agent registry, Mendicino says, 2 December 2022, https://www.nationalobserver.com/2022/12/02/news/liberals-consult-public-merits-foreign-agent-registry-mendicino, accessed 8 March 2023.

[52]Government of Canada, Consultation on a foreign influence transparency registry, https://www.canada.ca/en/services/defence/nationalsecurity/consultation-foreign-influence-transparency.html, accessed 10 July 2023.

[53]Government of Canada, What We Heard Report: Consulting Canadians on the merits of a Foreign Influence Transparency Registry, https://www.publicsafety.gc.ca/cnt/rsrcs/pblctns/2023-nhncng-frgn-nflnc-wwh/index-en.aspx, accessed 14 December 2023.

[54]Toronto Star, Canada’s top spy has a suggestion for tracking foreign interference in elections, 2 March 2023, https://www.thestar.com/politics/federal/2023/03/02/canadas-top-spy-has-a-suggestion-for-tracking-foreign-interference-in-elections.html, accessed 8 March 2023.

[55]Library of Congress, Israel: Disclosure Requirements for Organizations Funded by Foreign Political Entities, https://www.loc.gov/item/global-legal-monitor/2016-07-19/israel-disclosure-requirements-for-organizations-funded-by-foreign-political-entities, accessed 8 March 2023.