On the one hand, the FBI continued to uncover agents who were accessing and exporting classified and sensitive information and who were undermining America's national strength. On the other hand, the State Department wanted to maintain good working relations with the Soviets who were bound with us in opposition to Hitler.
Two incidents exemplify this trend. One happened shortly before the official split between the Soviets and the Nazis. Historian Medford Stanton Evans writes:
One such case arose in 1938, involving the Soviet agent Mikhail Gorin, surveilled obtaining confidential data from a civilian staffer of the U.S. Navy. The FBI nabbed both suspects, who were charged with espionage violations and convicted. The naval employee would serve four years in prison, but the Soviet agent would walk free, thanks to State Department intervention. According to the FBI's account, the judge in the case, "on recommendation of the Department of State, and through the authorization of the Attorney General, suspended the execution of Gorin's original sentence and placed him on probation."
Over the decades, there has been a tension between the State Department - home of diplomats - and the intelligence community, charged with gathering information and keeping information from the foreign governments. By 1941, Hitler was ready to attack the Soviet Union, which he did in June of that year, largely surprising the Soviets. At that point, the Soviet Union became the explicit ally of the United States, and the pressure from the State Department to downplay anti-American espionage by the Communist Soviet government became greater.
Even more troubling to the Bureau was the 1941 case of the Soviet superspy Gaik Ovakimian. Having tracked his endeavors in behalf of Moscow, the FBI arrested him for violations of the Foreign Agents Registration Act and thought it had him dead to rights. Again, however, the State Department stepped in to change things. The FBI memo about this says "arrangements were made by the Soviets with the United States State Department for the release of Gaik Ovakimain and his departure for the Soviet Union." The somewhat doubtful reason given for this lenient treatment was that the Soviets would reciprocate by releasing six Americans held by Red officials.
The excuse for releasing a known Communist spy was 'doubtful' because of the six hoped-for releases, only three would make it back to the United States, and of those, two turned out to be Soviet agents.
Catch and release is an activity enjoyed by some fishermen, but when it comes to Communist spies, it's probably not the best way to deal with them.