Mark Taylor
Senior Editorial Manager
The US government has hardened its focus on anti-corruption enforcement with a new law that has major implications for businesses operating across borders.
The Foreign Extortion Prevention Act (FEPA), signed into law on 22 December 2023, criminalises “demand-side” bribery.
This is defined as the acceptance of a bribe from a US citizen, company or issuer, or anyone located within the territory of the US, when made to obtain or retain business.
More specifically, the law’s prohibitions extend to any of the following conduct by a foreign official: “to corruptly demand, seek, receive, accept, or agree to receive or accept, directly or indirectly, anything of value personally or for any other person or nongovernmental entity, by making use of the mails or any means or instrumentality of interstate commerce … ”
Offenders may face up to 15 years of imprisonment, fines up to $250,000 or three times the value of the bribe received, or both.
Why was FEPA drawn up?
Anti-corruption organisations believe that FEPA will help root out foreign corruption at its source by punishing foreign officials who might evade prosecution by their home governments.
Legal experts at Alston & Bird called the update “an unmistakable signal of continued US prioritisation of anti-corruption enforcement”.
“Yet another area for compliance program focus and a reminder of the importance of thorough third-party due diligence,” said Isabelle De Smedt, anti-corruption partner at Alston & Bird.
“FEPA’s criminalisation of the demand-side of bribery fills a hole in the US’s otherwise robust anti-corruption regime,” added Andrew Good, white collar crime partner at law firm Skadden.
How does FEPA compare to the Foreign Corrupt Practices Act?
The Foreign Corrupt Practices Act (FCPA) has long targeted the “supply side” of foreign bribery, by sanctioning US persons and entities that offer bribes to foreign officials.
By addressing foreign officials who receive such bribes, FEPA significantly broadens US prosecutors reach in pursuing corrupt officials. Previously, these prosecutions have only been carried out via FCPA-adjacent US statutes, such as those concerning money laundering.
Rather than amending the FCPA, it adds “foreign officials” to the class of persons covered by the statute prohibiting bribery of domestic public officials, 18 U.S.C. § 201.
FEPA’s definition of “foreign official” closely follows that of the FCPA but expands upon it to include “senior foreign political figures”, which includes senior executives of foreign state-owned enterprises.
It also includes individuals acting in official and unofficial capacities for, or on behalf of, governments, departments, agencies, instrumentalities, or public international organisations.
FEPA’s jurisdictional reach aligns with the FCPA, requiring a US aspect in the form of conduct occurring in the United States or bribes solicited from US-listed companies or “domestic concerns,” such as US citizens and non-issuer US companies.
“While the U.S. Department of Justice may find that it faces logistical and diplomatic challenges in enforcing FEPA, particularly when the targeted foreign official sits beyond the reach of US courts, US prosecutors are not unfamiliar with such challenges and have shown an ability to successfully navigate them in previous FCPA-related cases,” said De Smedt.
How corporates should respond to the new anti-bribery law
FEPA’s enactment, along with the Biden Administration’s continued focus on foreign corruption, suggest that companies should prepare for increased US anti-corruption enforcement activities, she said.
Legal experts said businesses should review and update anti-bribery/anti-corruption compliance programs.
This includes supplementing training for officers and employees who may interact with the now-broader defined ecosystem of foreign officials.
It will also require third-party due diligence processes to be strengthened to identify and assess any involvement with or related to this broader universe of foreign officials.
CUBE comment
There is little doubt that FEPA is a landmark law which can stamp out international corruption at its source.
Whilst ostensibly a US initiative, FEPA is bipartisan, extra-territorial, and should be on the radar of any compliance team inside a multinational corporate.
With the power to tackle any foreign official who demands or accepts a bribe from an American or American company, anywhere in the world, it may prove to be the “most sweeping and consequential foreign bribery law in nearly half a century”, as billed by transparency campaigners.
The FCPA has been an effective tool for prosecutors to tackle companies and individuals offering and paying bribes to foreign officials, and the new legislation will only empower officials to go further.
Businesses should prepare for robust enforcement activity of both the FCPA and FEPA and adjust their compliance programs to address new areas of risk created by the new law.
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