The Foreign Corrupt Practices Act (FCPA) is a United States law that prohibits Americans and employees of American companies from bribing foreign officials. It consists of two main parts: one that forbids bribery and another that mandates transparency in accounting practices. Violating either part of the law can lead to significant fines and criminal charges. The FCPA applies to any action that offers something of value to a foreign official in exchange for their actions, and it can even apply to individuals outside of the US if their actions involve US banks. The law also mandates that companies maintain accurate records and implement internal controls to prevent corruption.
The Foreign Corrupt Practices Act (FCPA) is a U.S. law that criminalizes bribery of foreign officials by U.S. citizens and employees of U.S. listed companies. It consists of two main provisions: one that prohibits bribery and another that imposes accounting transparency requirements under the Securities Exchange Act of 1934. Violating either provision can result in substantial fines, and corrupt acts may lead to criminal charges. The FCPA broadly prohibits the bribery of foreign officials by U.S. citizens and companies, encompassing any act that offers something of value to influence the actions of foreign officials, political parties, candidates, or individuals who provide resources to such officials. There are exceptions for facilitating payments, such as those made to obtain a business licence. However, this aspect of the FCPA is controversial because it can apply to individuals outside the U.S. who have no affiliation with U.S. companies. For instance, if an executive of a French company instructs their company to make a payment to a Colombian official to secure a lucrative government contract, the executive could face charges under the FCPA if the payment is processed through a correspondent bank in the U.S., even if the company’s bank is in France. Such situations frequently arise and fall within the U.S. banking system, which can extend the reach of the FCPA to foreign entities and individuals. Additionally, the FCPA includes a mandatory accounting provision that aims to prevent bribery by U.S. listed firms by limiting the ability to conceal corrupt transactions. This provision necessitates regular bookkeeping, internal controls, and compliance mechanisms to prevent the misuse of resources.
The Foreign Corrupt Practices Act (FCPA) is a U.S. federal law that prohibits the bribery of foreign officials for the purpose of obtaining or retaining business.
The FCPA applies to all U.S. individuals and companies, as well as foreign companies listed on U.S. stock exchanges or that engage in certain activities within the United States.
A bribe under the FCPA includes any payment, gift, or promise of something of value to a foreign official to influence their actions in obtaining or retaining business.
Facilitation payments, also known as grease payments, are small payments made to expedite routine government actions. While some countries may allow facilitation payments, the FCPA prohibits such payments.
Violations of the FCPA can result in significant penalties, including fines, imprisonment, and disgorgement of profits. Companies may also face reputational damage and loss of business opportunities.
Yes, a company can be held liable for the actions of its employees if those actions were taken within the scope of their employment and intended to benefit the company.
There are limited exceptions and defences available under the FCPA, such as the “local law” defence, which allows for payments that are lawful under the written laws of the foreign country.
Companies can ensure compliance with the FCPA by implementing robust anti-corruption policies, conducting regular training for employees, conducting due diligence on business partners, and implementing internal controls and monitoring systems.
Yes, individuals can report FCPA violations anonymously through the U.S. Securities and Exchange Commission’s whistleblower program.
Yes, non-U.S. companies can be prosecuted under the FCPA if they engage in bribery or other prohibited activities within the jurisdiction of the United States.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 16th April 2024.
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