United States - FEPA
What does it consist of?
On December 22, 2023, the President of the United States, Joe Biden, enacted the Foreign Extortion Prevention Act (FEPA) as part of the National Defense Authorization Act.
This establishes criminal liability for officials of foreign governments who demand, request, receive, or accept a bribe from a US company, thus applying sanctions on the “demand side” of bribery.
FEPA complements the Foreign Corrupt Practices Act (FCPA), which punishes US companies that offer and/or pay bribes, thus sanctioning the “supply side” of bribery.
This regulation is part of the “Strategy to Combat Corruption” promoted by the Biden administration, which identifies anti-corruption efforts as a matter of national security.
Consequently, the Department of Justice (DOJ) now has a new tool to protect US companies operating abroad, extending its efforts beyond investigations and sanctions on companies to also target individual accountability.
Similarly to the FCPA, the FEPA does not limit its jurisdiction to US territory but indicates its extraterritorial application, involving foreign officials who receive bribes and have a connection to the United States.
Additionally, it includes prison sentences of up to 15 years. The United Kingdom, France, and Germany already have legislation that sanctions the “foreign demand side” of bribery, enabling continued collaboration with those countries.
Impact on company compliance programs:
The FEPA law affects companies, as the DOJ will increase scrutiny on compliance programs; therefore, companies must review and update these programs regarding bribery prevention.
- Informing about the scope of the new regulations
- Strengthening training for employees who interact with public officials, according to the law’s definition.
- Reviewing due diligence processes to know who they are dealing with.
- Enhancing channels for reporting and ensuring anonymous reporting.
- Establishing protocols for reporting to authorities if aware of a situation related to FEPA.
- Cooperating in investigations
How is a foreign official defined in the FEPA?
It’s worth noting that the scope of the definition of “foreign official” in the FEPA is broader than in the FCPA, encompassing individuals acting in an official or unofficial capacity, for or on behalf of a government, department, agency, organization, or international public body.
Consequences of non-compliance with the FEPA
Foreign officials found guilty of bribery can face:
- Fines of up to US$250,000 or,
- Three times the value of the bribe (whichever is greater).
