FCPA — Foreign Corrupt Practices Act

The Foreign Corrupt Practices Act (FCPA) of 1977 is a landmark US federal statute combating international corruption. It comprises two central components: the anti-bribery provisions and the accounting provisions (books and records and internal controls requirements).

The anti-bribery provisions prohibit US persons, US companies, and certain foreign persons from making, offering, or promising corrupt payments to foreign government officials to obtain or retain business. The accounting provisions require US-listed companies (issuers) to maintain accurate books and records and to devise a system of internal accounting controls providing reasonable assurance that transactions are properly recorded.

The FCPA is jointly enforced by the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) and has become the world's most significant anti-corruption statute. Enforcement has intensified dramatically since the 2000s, with individual penalties reaching billions of dollars.

The FCPA was enacted in response to the Watergate revelations and a mid-1970s SEC investigation that found over 400 US companies had made corrupt payments totalling more than USD 300 million to foreign government officials. President Jimmy Carter signed the act into law on 19 December 1977.

The 1988 amendments (under the Omnibus Trade and Competitiveness Act) created an exception for so-called 'facilitating payments' (grease payments for routine governmental actions) and introduced a compliance defence approach. The 1998 amendments (International Anti-Bribery Act) significantly expanded the FCPA's jurisdiction to implement US obligations under the OECD Convention on Combating Bribery of Foreign Public Officials. The amendments extended criminal liability to foreign persons and companies engaging in bribery acts with a nexus to US territory. Since 2004, enforcement has increased exponentially.

On 10 February 2025, President Donald Trump signed Executive Order 14209 ('Pausing Foreign Corrupt Practices Act Enforcement to Further American Economic and National Security'), directing the DOJ to cease initiating new FCPA investigations and enforcement actions during a 180-day review period and to review existing matters. On 9 June 2025, the DOJ issued new FCPA enforcement guidelines (the Blanche memorandum), resuming enforcement with a refocused approach centred on a nexus to US interests, cartel-related cases, and individual misconduct.

The FCPA has an expansive scope with three categories of persons subject to its provisions:

• Issuers (US-listed companies): All companies whose securities are registered on a US stock exchange or that are subject to SEC reporting requirements — regardless of domicile. They are subject to both anti-bribery and accounting provisions.
• Domestic concerns (US domestic entities): All US citizens, US residents, and entities organised under US law — subject to the anti-bribery provisions.
• Certain foreign persons and entities: Since the 1998 amendments, non-US persons may also be prosecuted if they carry out bribery acts in whole or in part within US territory or use US infrastructure (e.g. US banks, email servers).
• Agents and intermediaries: Third parties acting on behalf of the above persons — principal liability for the actions of agents is a central enforcement theme.

• Anti-bribery provisions: Prohibition on paying, offering, or promising money or anything of value to foreign government officials, parties, or candidates to obtain or retain business.
• Books and records (Section 13(b)(2)(A)): Obligation for issuers to maintain books and records that accurately and in reasonable detail reflect transactions.
• Internal controls (Section 13(b)(2)(B)): Obligation for issuers to maintain a system of internal accounting controls providing reasonable assurance for proper recording and authorisation of transactions.
• Third-party due diligence: Due diligence in selecting and monitoring agents, consultants, and business partners, particularly in high-risk jurisdictions.
• Compliance programme: Although not explicitly mandated by statute, DOJ and SEC expect robust FCPA compliance programmes as a mitigating factor in enforcement actions.
• Penalties — anti-bribery provisions: Criminal penalties up to USD 250,000 per violation for individuals and USD 2 million for entities; imprisonment up to five years.
• Penalties — accounting provisions (wilful violations, 15 U.S.C. § 78ff): Criminal penalties up to USD 5 million and 20 years' imprisonment for individuals and up to USD 25 million for entities.
• SEC civil sanctions: The SEC may impose tiered, annually inflation-adjusted civil penalties (15 U.S.C. § 78u(d)(3)) and, in FCPA matters, regularly orders disgorgement of ill-gotten gains plus prejudgment interest.

The penalties bullet lists only the anti-bribery ranges (max USD 250,000/individual, USD 2m/entity, up to 5 years). The more severe accounting-provisions sanctions for willful violations are missing: up to USD 5m and 20 years for individuals, up to USD 25m for entities (15 U.S.C. § 78ff).

The entry omits the most significant recent FCPA development: on 10 February 2025 President Trump signed Executive Order 14209, directing the DOJ to cease initiating new FCPA investigations during a 180-day review. On 9 June 2025 the DOJ issued new enforcement guidelines (Blanche memorandum) resuming enforcement with a refocused approach (US-interest nexus, cartels, individual misconduct).