Sovereign Wealth Fund Transparency Act
S. 1488, titled the Sovereign Wealth Fund Transparency Act, amends the Foreign Agents Registration Act (FARA) of 1938. Its core changes are: (1) narrowing the commercial activities exemption so that agents promoting public or political interests of a foreign government or foreign political party (including activities on behalf of a sovereign wealth fund) are not exempt from FARA registration; (2) giving the Attorney General authority to issue civil investigative demands (CIDs) to enforce disclosure requirements for agents of foreign principals, with a detailed process for producing documents, answering questions, and giving oral testimony; and (3) creating civil penalties for failures to register or update registrations, with fines that go to defraying enforcement costs. The act also requires annual reporting to Congress on the use of the new CID authority and related enforcement activity, and the CID authority would sunset after five years unless extended. In short, the bill tightens oversight of foreign influence by sovereign wealth funds and other foreign principals, equips the Justice Department with a pre-judgment tool to obtain information, and strengthens penalties for noncompliance with registration requirements.
Key Points
- 1Clarifies FARA exemption: The commercial activities exemptions in FARA would not apply to any agent of a foreign principal whose activities promote public or political interests of a foreign government or a foreign political party, including activities undertaken on behalf of a sovereign wealth fund. This broadens FARA coverage to such actors.
- 2New civil investigative demands (CIDs): The Attorney General (or designee) would have authority to issue CIDs to compel production of documents, written answers, and/or oral testimony from individuals or entities suspected of involvement with foreign principals. The section details how CID requests must be issued, served, and what they may require, including protections for confidential or privileged information.
- 3CID procedures and safeguards: The bill prescribes who can serve CIDs, how service is accomplished, how documentary material and testimony must be handled, and how privilege and protective rules apply. It also outlines court processes to enforce, modify, or quash CID demands and how rules from the Federal Rules of Civil Procedure apply.
- 4Sunset for CID authority: The CID authority would expire five years after enactment, unless extended.
- 5Annual reporting: The Attorney General must report annually (and define terms for this purpose) on CID usage, the number and nature of CID actions, enforcement outcomes (including any charges filed), the number of registrations filed under FARA, and related information. The reports must balance transparency with protecting the interests of uncharged third parties.
- 6Civil penalties for noncompliance: The bill creates civil fines for failure to register or update registrations under FARA, with specific penalties:
- 7- Up to $10,000 per violation for failing to file a timely or complete registration statement.
- 8- Up to $1,000 per violation for failing to file a timely or complete supplement.
- 9- Up to $200,000 for knowingly failing to remedy a deficient filing within 60 days.
- 10- Up to $200,000 for knowingly failing to comply with other provisions of the Act.
- 11Additional enforcement structure: The bill reorganizes and augments FARA’s enforcement framework to include civil penalties (in addition to any existing criminal remedies), alignment with CID processes, and explicit administrative channels for compliance and recap.