What laws regulate foreign funding of US political activities?
Executive summary
Federal law bars foreign nationals from making contributions, donations, expenditures, independent expenditures, or disbursements in connection with U.S. federal, state, and local elections, and the Federal Election Campaign Act (FECA) and implementing FEC regulations define the contours of that prohibition and enforcement mechanisms [1] [2] [3]. Significant gaps and constitutional constraints—chiefly around corporate speech, donor transparency for tax‑exempt groups, and enforcement capacity—have prompted proposed congressional fixes and state experiments but leave room for foreign-influenced money to enter U.S. politics through intermediaries and corporate structures [4] [5] [6].
1. The statutory backbone: FECA’s ban on foreign contributions
The principal statutory bar is 52 U.S.C. §30121, part of the Federal Election Campaign Act framework, which makes it unlawful for “foreign nationals” to directly or indirectly make or promise contributions or donations in connection with any election, and forbids anyone from soliciting, accepting, or receiving such funds from a foreign national [1]. Congress expanded the statutory language in 2002 to refine who counts as a national and to close certain definitional gaps, and subsequent CRS summaries reiterate that the Act also forbids foreign nationals from making expenditures or independent expenditures and directs FEC regulation and enforcement [1] [3].
2. FEC regulations and donor‑participation rules that extend the ban
The Federal Election Commission’s implementing rules in 11 C.F.R. §110.20 operationalize the statutory ban and add an important operational restriction: foreign nationals may not “direct, dictate, control, or directly or indirectly participate” in decision‑making about election‑related activities for corporations, PACs, labor orgs, or political organizations, and treasuries or donations tainted by foreign sources are prohibited [2]. The FEC’s guidance for candidates and committees reiterates that the prohibition covers a broad set of transactions — including inaugural committees and certain party accounts — and sets out “reasonable inquiry” standards for determining whether a donor is a U.S. citizen or green‑card holder [7].
3. Enforcement: civil fines, DOJ referrals, and institutional limits
Enforcement is primarily civil through the FEC, which can impose fines and, in “knowing and willful” cases, refer matters to the Department of Justice for criminal prosecution; CRS and FEC materials describe this two‑track enforcement system and the evidentiary standards involved [8] [3]. Campaign Legal Center and other advocates have criticized the FEC’s recent enforcement choices and internecine commission gridlock, arguing that certain FEC interpretations may permit foreign‑sourced funds funneled through U.S. corporations or investments to influence elections absent aggressive enforcement [9].
4. Legal and practical loopholes: corporate subsidiaries, 501(c) groups, and ballot measures
Federal law and court decisions have left avenues for foreign‑influenced money to reach political activity: U.S. subsidiaries of foreign corporations can engage in political spending under narrow circumstances if decision‑making and funding meet statutory tests, and tax‑exempt organizations (many 501(c) groups) often do not disclose donors, potentially obscuring foreign sources that then fund political advocacy or ads [5] [4]. The FEC has also grappled with limits on applying the federal foreign national ban to ballot‑measure campaigns, leaving a patchwork in which state laws and rulings can diverge from federal practice [10].
5. Constitutional constraints and ongoing legal debate
Proposals to tighten restrictions collide with First Amendment protections and Supreme Court precedents like Citizens United, prompting legal scholarship and litigation about how far the government can go to restrict corporations with foreign shareholders or to bar independent expenditures by foreign‑influenced entities; scholars urge careful tailoring to survive constitutional scrutiny [11] [12]. That jurisprudential boundary shapes both what Congress can enact and how aggressively regulators can interpret the statute without inviting successful constitutional challenges [11].
6. Policy responses in Congress and the states
Congressional proposals and committee actions—ranging from H.R. 1‑style provisions to the No Foreign Election Interference Act (H.R. 8314)—seek to tighten verification on online donations, require disclosure by tax‑exempt groups, and bar political spending by firms with significant foreign ownership or control, reflecting bipartisan concern but also political and legal friction [8] [13] [6]. States have experimented with their own statutes restricting foreign‑influenced corporate giving and ballot‑measure funding, but differences in state law and unresolved federal questions mean the regulatory landscape remains fragmented [10] [5].