The Foreign Corrupt Practices Act

Navigate the U.S. Foreign Corrupt Practices Act (FCPA) and its significance in curbing bribery. Understand its global impact and see how Diligent aids in ensuring compliance, promoting ethical business practices in today's financial landscape.

What is the FCPA?

The Foreign Corrupt Practices Act (FCPA) is a U.S. law which lays down provisions to stop business persons from making bribery payments to officials of foreign governments with the intent of securing business. Congress enacted the U.S. Foreign Corrupt Practices Act (FCPA or the Act)

in 1977 in response to revelations of widespread bribery of foreign officials by U.S. companies. The Act was intended to halt those corrupt practices, create a level playing field for honest businesses, and restore public confidence in the integrity of the marketplace.

The anti-bribery provisions prohibit U.S. persons and businesses (domestic concerns), U.S. and foreign public companies listed on stock exchanges in the United States or which are required to file periodic reports with the Securities and Exchange Commission (issuers), and certain foreign persons and businesses acting while in the territory of the United States (territorial jurisdiction) from making corrupt payments to foreign officials to obtain or retain business.

Challenge of addressing FCPA Compliance

The U.S. Foreign Corrupt Practices Act (FCPA) aims to combat bribery and corruption. It establishes liability for corporations regarding bribery payments and third-party oversight. The U.S. Securities and Exchange Commission (SEC) and the U.S. Department of Justice (DOJ) both aggressively enforce the FCPA to encourage fair business practices on a global scale. The DOJ expects a risk-based compliance program that applies greater resources and due diligence for the areas at highest risk in your organization. In addition, senior management is expected to go beyond internal controls by creating a tone from the top that embeds a culture of FCPA compliance throughout the organization.

Fines for FCPA violations frequently are in the hundreds of millions of dollars category with the heftiest fine nearing $1 billion. The company is not the only entity at stake when violating FCPA compliance. Individual employees across all levels of the organization can be hit with civil enforcement actions that can result in significant civil penalties as well as disgorgement of profits gained from corrupt practices. Since 1977, FCPA has been one of the most prominent anti-corruption acts facing organizations and continues to remain a significant concern to ethics and compliance programs globally.

Corruption Enforcement Continues to Increase

Ongoing global enforcement with implications to both organizations and ownership.

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