---
title: The Foreign Corrupt Practices Act
description: An overview of the key legal standards and requirements under the Foreign Corrupt Practices Act.
keywords: [FCPA, anti-corruption, bribery, foreign officials, SEC, DOJ]
category: law
---

## Introduction to the Foreign Corrupt Practices Act

The Foreign Corrupt Practices Act (FCPA) is a federal statute enacted in 1977 that prohibits the bribery of foreign government officials in order to obtain or retain business. [1] The FCPA has two main components: (1) anti-bribery provisions that criminalize the payment of bribes to foreign officials, and (2) accounting provisions that require issuers of securities to maintain accurate books and records and implement robust internal accounting controls. [2] The FCPA is enforced primarily by the U.S. Department of Justice (DOJ) and the U.S. Securities and Exchange Commission (SEC). [3]

The FCPA was enacted in the wake of revelations that numerous U.S. companies were making illegal payments to foreign government officials to secure business opportunities. [4] Congress sought to restore public confidence in the integrity of the American business system and prevent the corrosive effect of foreign bribery on democratic institutions. [5] Since its enactment, the FCPA has become a key tool in the U.S. government's fight against global corruption.

## Anti-Bribery Provisions

The anti-bribery provisions of the FCPA prohibit any U.S. person, domestic concern, or issuer of securities from corruptly offering, paying, promising to pay, or authorizing the payment of money or anything of value to a foreign official for the purpose of obtaining or retaining business. [6] To establish a violation, the government must prove the following elements beyond a reasonable doubt:

1. The defendant was a U.S. person, domestic concern, or issuer of securities;
2. The defendant corruptly offered, paid, promised to pay, or authorized the payment of money or anything of value;
3. The payment was made to a foreign official, foreign political party, or foreign party official; and
4. The purpose of the payment was to obtain or retain business. [7]

The FCPA defines "foreign official" broadly to include any officer or employee of a foreign government, a public international organization, or any department or agency thereof, or any person acting in an official capacity. [8] This definition has been interpreted to encompass not only high-level government officials, but also low-level employees of state-owned or state-controlled enterprises. [9]

The "corruptly" element of the offense requires proof that the defendant acted with the intent to wrongfully influence the foreign official to misuse their official position. [10] However, the government need not show that the bribe was successful in influencing the official or that the defendant actually obtained the desired business. [11]

Penalties for violations of the FCPA's anti-bribery provisions can be severe, including fines of up to $2 million for corporations and $250,000 for individuals, as well as imprisonment of up to 5 years. [12] Individuals may also be subject to civil penalties of up to $16,000 per violation. [13]

## Accounting Provisions

In addition to the anti-bribery provisions, the FCPA also imposes certain accounting and record-keeping requirements on issuers of securities registered with the SEC. [14] Specifically, the accounting provisions require issuers to:

1. Make and keep books, records, and accounts that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the issuer; and
2. Devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances that:
   - Transactions are executed in accordance with management's general or specific authorization;
   - Transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles or any other criteria applicable to such statements, and to maintain accountability for assets;
   - Access to assets is permitted only in accordance with management's general or specific authorization; and
   - The recorded accountability for assets is compared with the existing assets at reasonable intervals, and appropriate action is taken with respect to any differences. [15]

Violations of the FCPA's accounting provisions can result in civil and criminal penalties, including fines of up to $25 million for corporations and $5 million for individuals, as well as imprisonment of up to 20 years. [16]

## Affirmative Defenses and Exceptions

The FCPA provides for certain affirmative defenses and exceptions to liability. For example, payments that are lawful under the written laws and regulations of the foreign official's country are not prohibited under the FCPA. [17] Additionally, the FCPA permits "facilitating payments" made to foreign officials to expedite or secure the performance of a "routine governmental action." [18] However, courts have interpreted this exception narrowly, and payments made to obtain or retain business generally do not qualify. [19]

Companies and individuals charged with FCPA violations may also assert an affirmative defense if they can demonstrate that the payment was a "reasonable and bona fide expenditure" directly related to the promotion, demonstration, or explanation of products or services, or the execution of a contract with a foreign government or agency. [20] The burden of proof for this defense rests with the defendant. [21]

## Enforcement and Compliance

The DOJ and SEC have been aggressive in their enforcement of the FCPA, bringing charges against a wide range of companies and individuals, both domestically and internationally. [22] In recent years, the agencies have increasingly targeted individuals, including executives and middle managers, for FCPA violations. [23]

To mitigate the risk of FCPA violations, companies are expected to implement robust compliance programs that include clear policies and procedures, training for employees, due diligence on third-party agents and intermediaries, and regular auditing and monitoring. [24] Companies that voluntarily disclose potential violations, cooperate with government investigations, and demonstrate an effective compliance program may be eligible for reduced penalties or declinations of prosecution. [25]

## Conclusion

The Foreign Corrupt Practices Act is a powerful tool in the U.S. government's fight against global corruption. By prohibiting the bribery of foreign officials and imposing strict accounting and record-keeping requirements, the FCPA aims to maintain the integrity of American businesses and promote fair competition in the global marketplace. Companies and individuals doing business internationally must remain vigilant in their compliance efforts to avoid the significant civil and criminal penalties associated with FCPA violations.

[1] 15 U.S.C. §§ 78dd-1, et seq.
[2] Id.
[3] See U.S. Dep't of Justice & U.S. Sec. & Exch. Comm'n, A Resource Guide to the U.S. Foreign Corrupt Practices Act 4 (2012).
[4] See S. Rep. No. 95-114, at 3-4 (1977).
[5] Id.
[6] 15 U.S.C. § 78dd-1(a).
[7] See United States v. Kozeny, 582 F. Supp. 2d 535, 538 (S.D.N.Y. 2008).
[8] 15 U.S.C. § 78dd-1(f)(1).
[9] See United States v. Esquenazi, 752 F.3d 912, 925-26 (11th Cir. 2014).
[10] See United States v. Kozeny, 582 F. Supp. 2d 535, 538 (S.D.N.Y. 2008).
[11] See United States v. Liebo, 923 F.2d 1308, 1311 (8th Cir. 1991).
[12] 15 U.S.C. §§ 78dd-2(g), 78ff(c).
[13] 15 U.S.C. § 78ff(c)(2)(B).
[14] 15 U.S.C. § 78m(b).
[15] Id.
[16] 15 U.S.C. § 78ff(a).
[17] 15 U.S.C. § 78dd-1(c)(1).
[18] 15 U.S.C. § 78dd-1(b).
[19] See United States v. Esquenazi, 752 F.3d 912, 928-29 (11th Cir. 2014).
[20] 15 U.S.C. § 78dd-1(c)(2).
[21] See United States v. Kozeny, 582 F. Supp. 2d 535, 540 (S.D.N