The U.S. Foreign Corrupt Practices Act (FCPA) of 1977 (15 U.S.C. § 78dd-1, et seq.) is a federal law designed to prevent all U.S. companies and their officers, directors, employees, and agents from making corrupt payments to foreign officials to retain or obtain business. Agents, including consultants, third-parties, distributors, and joint-ventures, are also subject to the anti-bribery provisions.
Any American company that conducts business outside of the United States must comply with the anti-bribery portion of the law. The FCPA also applies to any foreign company with a U.S. subsidiary, does business in the United States, or has transactions that go through the U.S. banking system. The FCPA also applies to employees of those companies.
FCPA violations can also occur if companies make payments to non-government third parties acting for or on behalf of foreign government officials. Any company that gives money, gifts, or other bribes to foreign government officials could draw scrutiny under the FCPA compliance policy. Corporations that don’t comply with the FCPA could pay hefty government fines, and individuals could be fined and imprisoned.
As well as prohibiting the bribery of foreign officials, federal law requires every company that reports to the U.S. Securities and Exchange Commission (SEC) to maintain accurate books and records. Companies must also follow accounting transparency guidelines, and have a system of internal controls. These are the accounting provisions covered under the Securities Exchange Act of 1934.
The FCPA is the most widely enforced U.S. anti-corruption law. The SEC and the U.S. Department of Justice (DOJ) are jointly responsible for FCPA enforcement actions.
Each has jurisdiction over specific types of violations:
- The SEC brings civil charges for violations of the anti-bribery and accounting provisions.
- The DOJ enforces the criminal and civil provisions of the anti-bribery provisions and willful violations of the accounting and record-keeping provisions.
Federal law enforcement policies strongly encourage companies to have effective compliance programs in place that identify, prevent and remediate risks across operations. An effective compliance program requires an enterprise “to exercise due diligence to prevent and detect criminal conduct” as well as “promote a culture that encourages ethical conduct and compliance” with the FCPA.