Understanding the Foreign Corrupt Practices Act (FCPA)

The Foreign Corrupt Practices Act (FCPA) is a United States law that prohibits companies and their employees from bribing foreign government officials to obtain or retain business. Enacted in 1977, the FCPA is enforced by both the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC).

Overview of the FCPA

The FCPA has two main provisions: the anti-bribery provision and the accounting provision. The anti-bribery provision makes it illegal to offer, pay, promise to pay, or authorize the payment of anything of value to a foreign official to influence their actions. The accounting provision requires companies to maintain accurate books and records and to have a system of internal controls.

What is the main purpose of the FCPA?

The main purpose of the FCPA is to prevent corruption and promote ethical business practices by prohibiting bribery of foreign officials and ensuring transparency in financial reporting.

Who is Covered by the FCPA?

The FCPA applies to U.S. companies, their officers, directors, employees, and agents, as well as foreign companies listed on U.S. stock exchanges. It also applies to any person who commits an act in furtherance of a corrupt payment while in the United States.

Who does the FCPA apply to?

The FCPA applies to U.S. companies, their officers, directors, employees, and agents, as well as foreign companies listed on U.S. stock exchanges. It also applies to any person who commits an act in furtherance of a corrupt payment while in the United States.

Key Provisions of the FCPA

The FCPA is divided into two main parts: the anti-bribery provisions and the accounting provisions. The anti-bribery provisions prohibit offering or giving anything of value to foreign officials to obtain or retain business. The accounting provisions require companies to keep accurate books and records and implement internal controls to prevent and detect bribery.

What are the two essential requirements of the Foreign Corrupt Practices Act?

The FCPA has two essential requirements: (1) prohibiting bribery of foreign officials to obtain or retain business, and (2) requiring companies to maintain accurate books and records and adequate internal controls.

Enforcement and Penalties

Violations of the FCPA can result in significant fines and penalties for both companies and individuals. The DOJ and SEC have the authority to investigate and prosecute violations, and enforcement actions have increased in recent years. Penalties can include criminal fines, civil penalties, and imprisonment for individuals involved in corrupt practices.