MI5 is domestic counter intelligence and MI6 is foreign intelligence. In short, MI5 deals with threats within the UK and MI6 deals with threats outside the UK.
MI stands for Military Intelligence. At some point, there were organizations named MI1 to MI19 that handled different things, but most of these were absorbed into other departments or disbanded after WWII.
MI5’s formal name is the “Security Service.” It was officially acknowledged in 1989.
Its official functions are:
> the protection of national security and, in particular, its protection against threats from espionage, terrorism and sabotage, from the activities of agents of foreign powers and from actions intended to overthrow or undermine parliamentary democracy by political, industrial or violent means.
> to safeguard the economic well-being of the United Kingdom against threats posed by the actions or intentions of persons outside the British Islands.
> to act in support of the activities of police forces, the National Crime Agency and other law enforcement agencies in the prevention and detection of serious crime.
Basically it does domestic espionage, counter-espionage, counter-terrorism, and anti-organised crime stuff, but generally in more of a support and analysis role (for example, it doesn’t have powers to arrest people – so it has to work with normal law enforcement to get things done).
MI6’s formal name is the “Secret Intelligence Service.” It was officially acknowledged to exist in 1994 (years after the James Bond books and films were mainstream).
It’s official functions are:
> to obtain and provide information relating to the actions or intentions of persons outside the British Islands; and to perform other tasks relating to the actions or intentions of such persons.
But they can only do that:
> in the interests of national security, … in the interests of the economic well-being of the United Kingdom; or … in support of the prevention or detection of serious crime.
MI6 are responsible for spying on people abroad.
There is also GCGQ (Government Communications Headquarters), first acknowledged in 1994 (with MI6). Their job is to handle anything involving communications – intercepting and analysing communications, decryption, encryption, translation on behalf of other parts of the UK Government (MI5, MI6, the Armed Forces etc.).
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