Anti-Corruption Compliance: FCPA and US Standards

The Foreign Corrupt Practices Act (FCPA) and related US anti-corruption standards govern how American companies and individuals conduct business with foreign officials, prohibiting bribery and mandating transparent accounting practices. Enforcement spans domestic and international operations, with penalties reaching tens of millions of dollars per violation. This page covers the statutory framework, how FCPA compliance programs are structured, the scenarios most likely to trigger enforcement, and the decision boundaries that separate lawful facilitation from prohibited conduct.

Definition and scope

The FCPA, enacted in 1977 and significantly amended by the Omnibus Trade and Competitiveness Act of 1988, contains two principal components: the anti-bribery provisions and the accounting provisions. The US Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) share enforcement authority, with DOJ handling criminal prosecutions and SEC managing civil enforcement for issuers registered with the commission.

Anti-bribery provisions prohibit US persons, US-registered companies, and foreign companies listed on US exchanges — along with their agents and intermediaries — from paying, offering, or authorizing anything of value to a foreign government official to obtain or retain business. The term "foreign official" includes employees of state-owned enterprises, a category that has been consistently construed broadly by DOJ (see the FCPA Resource Guide, 2nd Edition, DOJ/SEC 2020).

Accounting provisions apply to all SEC-registered issuers regardless of whether any foreign conduct is involved. These provisions require accurate books and records and a system of internal accounting controls sufficient to prevent and detect improper payments (15 U.S.C. § 78m(b)).

The FCPA's jurisdictional reach extends to conduct occurring outside the United States when it involves a US nexus — a wire transfer through a US bank, an email routed through US servers, or an action taken by a US person abroad. Foreign subsidiaries of US companies fall within scope if a US parent directed, authorized, or knowingly permitted the conduct.

An effective compliance program typically treats FCPA obligations as one layer within a broader anti-corruption framework that also references the UK Bribery Act 2010, OECD Anti-Bribery Convention obligations, and domestic statutes such as the Travel Act (18 U.S.C. § 1952).

How it works

A structured FCPA compliance program follows a framework with discrete operational phases:

1. Risk assessment — Mapping geographic markets, transaction types, and third-party relationships against corruption risk indices such as Transparency International's Corruption Perceptions Index. Higher-risk jurisdictions and transaction types receive proportionally greater controls.
2. Policy and procedures development — Drafting gift, entertainment, and hospitality policies; anti-facilitation-payment policies; and vendor due diligence procedures aligned with the FCPA's text and the DOJ/SEC Resource Guide standards.
3. Third-party due diligence — Screening agents, distributors, joint-venture partners, and consultants who interact with foreign officials. The Resource Guide identifies third-party intermediaries as the single highest-risk vector in FCPA enforcement actions.
4. Training and communication — Delivering role-specific training to personnel who travel internationally, manage procurement, or supervise third-party contracts. (Compliance training frameworks address cadence, format, and documentation requirements.)
5. Monitoring, auditing, and testing — Conducting transactional testing of expense reports, accounts-payable ledgers, and petty-cash accounts in high-risk locations. The COSO Internal Control – Integrated Framework provides widely adopted control benchmarks.
6. Reporting and investigation — Maintaining a mechanism for employees and third parties to report suspected violations, and establishing investigation protocols with legal privilege protections in place.
7. Remediation and continuous improvement — Updating controls in response to audit findings, enforcement trends, or changes in business operations.

Common scenarios

FCPA enforcement actions cluster around identifiable transaction patterns:

• Government procurement and licensing — Payments to officials who control permits, import licenses, or contract awards. This is the most frequently charged fact pattern in DOJ enforcement actions.
• Customs and inspections — Cash payments to expedite customs clearance, which may constitute "facilitation payments" (a narrow statutory exception that applies only to routine non-discretionary acts) or prohibited bribes depending on the official's discretionary authority.
• State-owned enterprise contracting — Payments to employees of entities that are majority-owned or controlled by a foreign government. Courts and enforcement agencies have upheld broad SOE coverage even when the entity operates in a commercial sector.
• Hospitality and gifts — Sponsoring travel, entertainment, or gifts for foreign officials. The FCPA does not set a bright-line dollar threshold; materiality and intent govern analysis.
• Charitable donations and political contributions — Payments routed through nominally charitable or political vehicles that benefit an official's personal or professional interests.

Decision boundaries

The most consequential analytical distinctions in FCPA practice are:

The facilitation payment exception — codified at 15 U.S.C. § 78dd-1(b) — is narrowly construed and does not exist under the UK Bribery Act 2010, creating a compliance asymmetry for multi-national operations. DOJ's Corporate Enforcement Policy rewards voluntary self-disclosure, full cooperation, and timely remediation with potential declinations or reduced penalties, making compliance due diligence documentation critical before and after suspected violations surface.

References

• US Department of Justice — FCPA Overview
• SEC FCPA Spotlight Page
• DOJ/SEC FCPA Resource Guide, 2nd Edition (2020)
• 15 U.S.C. § 78dd-1 — FCPA Anti-Bribery Provisions, House US Code
• 15 U.S.C. § 78m(b) — Accounting Provisions, House US Code
• DOJ Corporate Enforcement Policy
• COSO Internal Control – Integrated Framework
• Transparency International Corruption Perceptions Index