What You Must Know About FCPA Enforcement

On February 10, 2025, President Donald Trump signed an Government Order (EO) dramatically altering the enforcement panorama of the Overseas Corrupt Practices Act (FCPA). The EO orders an instantaneous pause on new FCPA investigations and enforcement actions whereas the Division of Justice (DOJ) opinions its enforcement tips. Ongoing instances can even be reassessed to make sure they align with the administration’s new priorities.

Key modifications embody:

• A 180-day pause on new FCPA enforcement actions, with exceptions requiring approval from the Legal professional Normal.
• A assessment of all previous and current FCPA instances to find out in the event that they had been improperly pursued.
• Revised enforcement tips to align with American financial and nationwide safety pursuits, prioritizing strategic enterprise benefits.
• Legal professional Normal oversight on any future FCPA instances, guaranteeing they match throughout the new coverage framework.

This marks a big departure from earlier administrations, which expanded FCPA enforcement, leading to billions of {dollars} in fines and penalties. 

In 2024:

• The DOJ and SEC initiated 26 FCPA-related enforcement actions.
• No less than 31 firms remained beneath investigation by the yr’s finish.
• Over the previous decade, there was a median of 36 FCPA instances per yr.

The Trump administration argues that overzealous enforcement has weakened U.S. companies by stopping them from participating in practices widespread amongst international rivals.

What Is the Overseas Corrupt Practices Act (FCPA)?

The FCPA, enacted in 1977, was designed to forestall U.S. firms from participating in bribery of international officers to realize a enterprise benefit. It has two primary provisions:

1. Anti-bribery Provisions 

It forbids U.S. firms, issuers or individuals anyplace on this planet, or international individuals whereas throughout the U.S., from corruptly providing or paying something of worth, straight or not directly, to a international authorities official, celebration or candidate, as a way to affect an official act or safe improper benefit to acquire or retain enterprise.

Willful violations of the anti-bribery provisions had been punishable by prison penalties of as much as $2 million for firms and $250,000 plus 5 years imprisonment for people, together with administrators, company officers, staff, brokers or stockholders. Civil penalties of as much as $26,262 may be utilized for firms or people discovered liable, and a disgorgement penalty could also be twice the quantity gained.

The anti-bribery provisions include an exception for “grease” funds outlined as small funds made to facilitate or expedite “routine governmental actions” similar to acquiring licenses and permits to do enterprise in a rustic, offering police safety, processing visas or authorities work orders, scheduling inspections, and the like.

There are solely two affirmative defenses:

1. Funds are allowed if they’re authorized beneath the written legal guidelines of the international official’s nation (however good luck discovering a rustic that publicly permits its officers to be bribed); and
2. Funds made as affordable or bona fide expenditures straight associated to the promotion, demonstration or clarification of merchandise or the execution or efficiency of a contract with a international authorities or company.

2. Accounting Provisions 

These require firms to take care of correct information and inner controls to forestall and detect corruption. They’re enforced by the Securities and Change Fee (SEC): 

1. Maintain books and detailed information that precisely replicate transactions and the disposition of company belongings;
2. Devise and keep an sufficient system of inner accounting controls; and
3. Conduct a periodic assessment of recorded and precise belongings.

Corporations violating the FCPA’s accounting provisions face civil penalties of $118,225 to $1,182,251 per violation. People might be fined $11,823 to $236,451 per violation.

The Administration’s Argument: Why Change FCPA Enforcement Now?

President Trump’s EO frames extreme FCPA enforcement as an impediment to U.S. world competitiveness. In accordance with the White Home truth sheet, the administration believes:

• FCPA enforcement creates an uneven enjoying subject by proscribing American firms from participating in enterprise practices which might be commonplace for worldwide rivals.
• Extreme enforcement drains assets from each companies and federal regulation enforcement.
• Nationwide safety is tied to financial energy, significantly in industries like important minerals, infrastructure and deep-water ports.

What’s Subsequent for U.S. Companies?

Whereas firms working internationally can count on a slowdown in FCPA enforcement because the DOJ reevaluates its method, they need to not interpret it as a purpose to deprioritize compliance, as modifications to the regulation itself haven’t been made—solely the enforcement technique is shifting. Anticorruption rules in different main economies, together with the UK Bribery Act and EU legal guidelines, would possibly nonetheless apply to your enterprise.

Past regulatory issues, bribery stays a monetary and operational threat. It could actually result in monetary mismanagement, reputational harm and authorized publicity beneath different statutes like wire fraud and cash laundering legal guidelines. The FCPA’s five-year statute of limitations means enforcement may return in full power in a future administration. Companies that weaken their compliance applications now could discover themselves unprepared later.

How you can Navigate Altering Compliance Laws

Step one in navigating fluctuating rules is having a transparent understanding of your compliance duties and establishing an export compliance program that everybody in your organization follows. A robust program not solely ensures adherence to current legal guidelines but in addition prepares your enterprise for potential shifts in enforcement priorities.

That can assist you construct a stable compliance technique, obtain our free guides:

And for a deeper understanding of the FCPA and what it entails, watch our on-demand webinar: Overseas Corrupt Practices Act: What You Must Know.

Like what you learn? Subscribe at this time to the Worldwide Commerce Weblog to get the most recent information and ideas for exporters and importers delivered to your inbox.

This submit, initially by Mary Okay. McCormick, was first printed in February 2008. It has been up to date to incorporate present info, hyperlinks and formatting.