The FEC relies on candidates' 'good faith' when it comes to foreign donations. But the agency's inspector general says that's 'insufficient oversight' and poses a 'national security risk.'

• Currently, the FEC relies on candidates and committees to attest that they haven't accepted foreign money.
• The agency's inspector general said that's "insufficient oversight" and that "poses a national security risk."

A report by the Federal Election Commission's internal watchdog has found that the body's current system of handling potential foreign contributions - largely relying on candidates and political action committees to certify that they haven't received foreign money - "poses a national security risk and provides insufficient oversight of possible illegal foreign donations."

That finding was included in the FEC Office of the Inspector General's annual report on management and performance challenges at the agency. While "potential foreign electoral influence" was briefly mentioned in last year's report, this year the watchdog dedicated an entire section to the issue.

The report also lists the ongoing growth in campaign spending, remote work during the COVID-19 pandemic, issues with senior leadership staffing, and cybersecurity to be among the biggest challenges that the nation's top election oversight agency faces.

Central to the issue when it comes to foreign money, according to the watchdog, is that the FEC must ultimately rely on the "good faith" of various entities that file reports with the commission.

"The FEC's practice of relying on filers' self-certifications concerning potential foreign contributions poses a national security risk and provides insufficient oversight of possible illegal foreign donations," the report declared. "Indeed, numerous recent cases highlight the risk of unlawful foreign influence in U.S. elections."

In recent years, several individuals have been convicted of pouring foreign money into American campaigns. Lev Parnas, a Ukrainian-born businessman and associate of Rudy Giuliani, was recently convicted of funnelling Russian money into American campaigns.

Separately, the FEC recently affirmed that foreign nationals could contribute to ballot measure campaigns, an apparent loophole in campaign finance law that lawmakers are now seeking to shut.

The OIG's report cited a recent investigation into the matter published in August, which found that analysts frequently defer to committees' self-certifications when it comes to donations received from foreign addresses and often does not seek to verify donors' citizenship themselves. That investigation in part recommended that campaigns be prepared to turn over documents such as copies of US passport information if asked by the commission.

"However, we recognize that the FEC's resources are significantly constrained," the report said, noting that that the agency's funding has only increased a minuscule amount in the last 13 years. "The increased demand on the agency without additional funding to provide resources to the FEC poses a challenge for the agency to identify and regulate unlawful foreign contributions," the report also said.

Brendan Fischer, Director of Federal Reform at the Campaign Legal Center, told Insider that the report's findings revealed ongoing issues with the agency. "This is an example of how dysfunction on the part of the FEC does put our elections at risk, including from foreign interference," he said.

But he also noted that the issue discussed by the report - donations that list a foreign address - pales in comparison to the issue of foreign money potentially pouring into "dark money" nonprofit groups, where donations don't even need to be reported to the FEC.

"That's only the tip of the iceberg," said Fischer. "The really concerning foreign contributions are not going to be reported contributions coming in within within federal limits, they're going to be 6 or 7-figure contributions going to a dark money group."

The inspector general report included a response from the commission, which stated that cases involving potential illegal foreign contributions are prioritized above others. The FEC also said it has "modified its case management software" to better address the issue, and current regulations to prevent foreign money from flowing into campaigns are "extensive."

"All committee treasurers are required by regulation to examine all contributions received for evidence of illegality," the commission insisted.

The FEC's rebuttal also noted that requiring the disclosure of something like US passport information, which the inspector general's office had recommended, would "very likely require a legislative change, which of course is solely the purview of Congress."