The Foreign Corrupt Practices Act of 1977 (FCPA) makes it unlawful for certain persons and entities to make payments or promises of payments to foreign government officials to assist with obtaining or retaining business. The FCPA also requires publicly traded companies (issuers) to maintain accurate books and records and to have a system of internal controls sufficient to provide reasonable assurance that transactions are executed, and assets are accounted for in accordance with generally accepted accounting principles (GAAP). Violations can result in civil and criminal charges, disgorgement of profits, penalties or fines, and even imprisonment.
The Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) jointly enforce the FCPA. Since 2009, total fines and penalties arising from FCPA enforcement have grown exponentially. While FCPA corporate enforcement actions declined overall in 2021, both 2019 and 2020 were record level years for enforcement actions. Whistleblower complaints received by the SEC increased significantly in 2021 compared to prior years, signifying the potential for increased investigation activity in the coming year(s). There has also been a continued focus on investigations and charges against individuals involved in perpetuating violations, in addition to the companies themselves.
In December 2021, consistent with the continued focus and importance of anti-corruption efforts, the White House published the United States Strategy on Countering Corruption which outlined five strategic pillars related to its fight against corruption including:
- Modernizing, Coordinating, and Resourcing U.S. Government Efforts to Better Fight Corruption
- Curbing Illicit Finance
- Holding Corrupt Actors Accountable
- Preserving and Strengthening the Multilateral Anti-Corruption Architecture
- Improving Diplomatic Engagement and Leveraging Foreign Assistance Resources to Advance Policy Goals
There are a number of ways practitioners can support companies on FCPA-related matters, including:
- Performing due diligence related to third-party intermediaries
- Developing, enhancing, and supporting corporate compliance programs
- Conducting risk assessments
- Investigating potential violations
In addition, practitioners should be aware of and evaluate any red flag indicators of potential FCPA violations. Due to the continued trend toward global operations, the risks that companies face related to bribery and corruption will only continue to grow.
Amy Yurish is a Managing Director in the Financial Expert business unit working out of the Reston (DC Metro) office. She has significant experience leading major forensic services engagements, providing forensic accounting and consulting / expert witness services to both public and private sector clients in disputes involving financial reporting, complex accounting, fraud allegations / bribery and corruption, and economic damages issues.
To explore how Ocean Tomo practitioners can support with compliance programs and investigations of FCPA-related matters, please contact: Amy Yurish, CPA, CFF, CFE at firstname.lastname@example.org or +1 (703) 654-1453.