In today’s global business landscape, ensuring ethical practices and maintaining legal compliance are paramount. The U.S. Foreign Corrupt Practices Act (FCPA) of 1977 stands as a cornerstone for ethical business conduct on the international stage. 

Understanding and adhering to FCPA guidelines, implementing a robust FCPA compliance program, and adhering to a comprehensive FCPA compliance checklist is imperative for companies operating internationally. These elements ensure legal adherence and bolster ethical standards in global business dealings.

What is FCPA?

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 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 that 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 giving money, gifts, or bribes to foreign government officials could be scrutinized 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.

What is the purpose of FCPA?

The primary objective of the Foreign Corrupt Practices Act (FCPA) is to curb bribery and corrupt dealings with foreign officials staunchly. This vital legislation promotes fair competition, ethical business practices, and transparency in international transactions. 

The FCPA mandates stringent accounting provisions and reporting standards for companies under its jurisdiction. Addressing anti-bribery provisions and emphasizing internal accounting controls, the FCPA safeguards against corrupt payments and unethical conduct within U.S. companies operating globally.

How is the FCPA regulated?

Enforcement of the FCPA falls under the purview of two fundamental entities: the U.S. Securities and Exchange Commission (SEC) and the U.S. Department of Justice (DOJ). Both entities wield distinct responsibilities, ranging from civil charges to criminal prosecution, ensuring comprehensive oversight and enforcement of FCPA provisions. 

These measures encompass vigilance against violations of the FCPA, be it concerning anti-bribery provisions or accounting provisions, ensuring adherence to ethical business practices, and deterring corrupt payments to foreign officials.

Who needs to comply with FCPA?

The scope of FCPA compliance extends to any American entity conducting business abroad. This mandate encompasses companies with foreign subsidiaries, involvement in U.S. financial systems, or transactions on U.S. soil. This requirement extends to individuals associated with these entities, all of whom are obligated to ensure adherence to the anti-bribery provisions of the FCPA and maintain accurate books, fulfilling their compliance obligations under the act.

By adhering to these regulations, publicly traded companies, issuers, and even universities operating internationally align themselves with FCPA compliance. This comprehensive approach aims to deter bribery schemes and prevent improper advantages while imposing civil penalties for non-compliance, promoting a culture of anti-corruption and ethical business practices within U.S. businesses abroad.

Penalties for an FCPA violation

Non-compliance with the Foreign Corrupt Practices Act (FCPA) can yield severe financial and reputational repercussions. Corporations risk substantial fines, with penalties often reaching astronomical amounts. Since its inception in 1977, the FCPA has seen over 250 settlements accumulating a staggering USD 24 billion in combined fines, some penalties soaring to USD 4 billion or more in isolated cases.

Individuals found guilty of violating the FCPA may face hefty fines and the possibility of imprisonment. The profound financial and reputational fallout resulting from an FCPA breach underscores the criticality of prioritizing compliance within organizations. The stringent enforcement actions and imposition of criminal penalties for bribery of foreign officials or other FCPA violations serve as a deterrent, emphasizing the need for due diligence and adherence to accounting provisions outlined within the act.

This robust approach aims to dissuade facilitating payments and corruption in foreign countries while ensuring stockholders and the U.S. government that entities operating within their jurisdiction are held accountable, fostering a culture of ethical business conduct and steering clear of entanglements with foreign political parties or political offices that could result in severe consequences.

ZenGRC is Your Compliance Solution

A robust and efficient compliance solution is indispensable in navigating the complexities of FCPA compliance. ZenGRC offers tailored solutions designed to assist businesses in effectively managing compliance obligations. 

With ZenGRC, companies can streamline their compliance efforts, mitigate risks, and ensure adherence to FCPA guidelines. Schedule a demo today!