The Foreign Corrupt Practices Act

An Overview and Its Application to Private Companies

Introduction

The Foreign Corrupt Practices Act (“FCPA”) was enacted in 1977 to prevent certain classes of individuals and businesses from making bribes to foreign government officials to retain business or obtain unfair business advantages. Foreign Corrupt Practices Act Unit, U.S. Department of Justice (last updated Jan. 9, 2025).

Persons and Entities Subject to the FCPA

The FCPA applies to two primary categories of entities: “issuers”; and “domestic concerns.” The Criminal Division of the U.S. Department of Justice & The Enforcement Division of the U.S. Securities and Exchange Commission, A Resource Guide to the U.S. Foreign Corrupt Practices Act 9 (2d ed. 2020) [hereinafter “FCPA Resource Guide”].

“Issuers” are companies that have a class of securities registered under Section 12 of the Securities Exchange Act or are required to file periodic reports with the Securities Exchange Commission under Section 15(d) of the Securities Exchange Act. Id. Accordingly, a company that has sold all or a portion of itself to the public via the stock market (commonly referred to as public companies) are “issuers.” Id.

“Domestic concern” refers to any individual who is a citizen, national, or resident of the United States, or any corporation, partnership, association, joint-stock company, business trust, unincorporated organization, or sole proprietorship, other than an issuer, that is either organized under the laws of the United States or that has its principal place of business in the United States. Id. at 10. Thus, a private company organized or operating in the United States qualifies as a domestic concern. See id.

Structure of the FCPA

The FCPA contains two distinct categories of provisions:
(1) the anti-bribery provisions; and
(2) the accounting provisions. Id. at 1. The anti-bribery provisions apply to both issuers and domestic concerns, as well as certain foreign individuals and companies acting while in the United States. Id. at 9. In contrast, the accounting provisions only apply to issuers. Id. Therefore, private companies are subject only to the anti-bribery provisions of the FCPA. See id.

Enforcement Authority and Liability

Both the Department of Justice (“DOJ”) and the Securities and Exchange Commission (“SEC”) are charged with enforcing the FCPA. Kimberly A. Parker et al., Complying with the Foreign Corrupt Practices Act § 1.04 (2025). The DOJ has exclusive authority to bring criminal enforcement actions for violations of both the anti-bribery and the accounting provisions. Id. Additionally, the DOJ possesses civil enforcement authority over domestic concerns for violations of the FCPA’s anti-bribery provisions. Id. The SEC, in contrast, is limited to civil enforcement authority over issuers for violations of both sets of provisions. Id. Therefore, a private company may face both civil and criminal liability from the DOJ for violations of the anti-bribery provisions. See id.

Scope of the FCPA’s Anti-Bribery Provisions

The anti-bribery provisions prohibit the payment, offer, or promise of money or anything of value to a foreign official for the purpose of influencing the official’s actions or securing an improper advantage in order to obtain or retain business. FCPA Resource Guide, supra, at 11. These provisions also prohibit the use of U.S. Mail or any means of interstate commerce in furtherance of a corrupt payment to a foreign official. Id. at 10. Interstate commerce includes any “trade, commerce, transportation, or communication” among states or between any foreign country and any state, which applies to communications conducted via intrastate instrumentalities such as a telephone call, an email, a text message, or a fax. Id.

The FCPA’s anti-bribery provisions can apply to acts that occur both inside and outside of the United States. Id. Under the “alternative jurisdiction” provision, which was added in 1998, companies or individuals can be held liable for acts occurring entirely outside of the United States. Id. at 11.

Elements of an Anti-Bribery Violation

Violations of the FCPA’s anti-bribery provisions include payments, offers, or promises intended to: (1) influence a foreign official’s acts or decisions in their official capacity; (2) induce a foreign official to violate their lawful duties; (3) secure an improper advantage; or (4) induce a foreign official to influence a foreign government or instrumentality. Id.  To constitute a violation of the FCPA, the payment, offer, or promise must also be made to assist in obtaining or retaining business or directing business to someone or some entity – known as the “business purpose test.” Id. This test is interpreted broadly and may encompass actions such as winning a contract, accessing non-public bid information, evading taxes or penalties, securing regulatory exceptions, or avoiding contract termination. Id. at 12.

To violate the anti-bribery provisions of the FCPA, a payment, offer, or promise must be made with “corrupt” intent. Id. at 13. This means that the actor must have intended to wrongfully influence the foreign official to misuse their position. Id. The payment, offer, or promise does not have to be successful; an unaccepted bribe or unfulfilled offer can still violate the FCPA. Id.

Establishing criminal liability for individuals under the FCPA requires a showing that the individual acted “willfully.” Id. Although not defined in the FCPA, courts have interpreted willfulness to mean that an act is committed voluntarily, intentionally, and with a corrupt purpose. Id. Unlike individuals, there is not a requirement of showing willfulness to hold corporations criminally or civilly liable under the anti-bribery provisions. Id.

The FCPA requires that the offer, payment, or promise be for “anything of value.” Id.at 14. This is broadly construed and may include cash, travel, gifts, and entertainment. Id. However, there is no minimum amount of value to violate the FCPA. Id. While small gifts and tokens of gratitude properly recorded in a business’ books and records are generally acceptable, more expensive and larger gifts are more likely to be found to have been given for corrupt purposes. Id. Charitable contributions are also permitted, provided they are not used indirectly to bribe a foreign official or as a guise for bribery. Id. Accordingly, companies should always record gifts to foreign officials and use proper controls and due diligence when engaging in charitable giving. Id. at 18.

Covered Recipients and Knowledge Standard

The anti-bribery provisions of the FCPA apply to payments or offers made to:
(1) foreign officials;
(2) foreign political parties or their officials;
(3) candidates for foreign political office; or
(4) any other person, while knowing that the payment will ultimately reach an individual falling within one of the foregoing categories. Id. at 19.

The definition of “foreign official” is broad and includes any formal officer or employee of a foreign government, department, agency, or instrumentality or of a public international organization (e.g. the United Nations, the World Bank, and the World Trade Organization), as well as anyone else acting on their behalf. Parker et al., supra, § 2.03 (quoting Foreign Corrupt Practices Act, 15 U.S.C. § 78dd-2(h)(2)). The term “instrumentality” is also broadly construed and is interpreted through a fact-specific analysis. FCPA Resource Guide, supra, at 20. The Eleventh Circuit Court of Appeals defined it as “an entity controlled by the government of a foreign country that performs a function the controlling government treats as its own.” Id. (quoting United States v. Esquenazi, 752 F.3d 912, 925 (11th Cir. 2014)).

The FCPA also prohibits the use of third parties or intermediaries to evade liability by making it unlawful to make payments to any person while knowing that the payment will be offered or given to a foreign official. Id. at 22. “Knowing” includes actual awareness, a firm belief that the payment being offered or promised will reach a foreign official, or awareness of a high probability that it will occur. Id. at 22 – 23. Purposefully avoiding actual knowledge will not shield an individual from liability. Id. at 23.

Exceptions and Affirmative Defenses

The anti-bribery provisions contain two defenses and one statutory exception. Parker et al., supra, § 2.11. The exception to the anti-bribery provisions is for payments that facilitate or expedite routine governmental action, such as processing visas, supplying utilities, or providing police protection. FCPA Resource Guide, supra, at 25. The purpose of the payment, rather than the amount, is what determines whether a payment falls within the exception. Id. at 26. Additionally, payments that fall under the exception may still be illegal under local laws, so it is important for companies to know the laws of the countries they are doing business in. Id.

The two affirmative defenses are:

(1) that the payment, offer, or promise was expressly lawful under the written laws of the foreign country (i.e. the “local law” defense); or
(2) that the payment was a reasonable travel or lodging business expense for a foreign official directly related to:

(a) a company’s product or service promotion, or
(b) contract execution or performance (i.e. the “reasonable and bona fide business expenditure” defense). Id. at 23.

Like other affirmative defenses, the burden of proof for these is on the individual or company being accused of violating the FCPA. Id.

Corporate Liability and Related Offenses

Corporate liability under the FCPA extends to acts committed by directors, officers, employees, or agents acting within the scope of their employment, where the act was intended, at least in part, to benefit the company. Id. at 28.

In addition to direct liability, an individual or company can be prosecuted for aiding and abetting or for conspiring to violate the FCPA. Id. at 35. Liability for conspiracy does not require that the defendant could have been independently charged with a substantive FCPA violation. Id. Civil liability may also arise for knowingly or recklessly providing substantial assistance to an FCPA violator. Id.

Penalties

Violations of the FCPA’s anti-bribery provisions can result in both civil and criminal penalties. Parker et al., supra, § 1.04. A company that violates the FCPA’s anti-bribery provisions may be fined up to $2,000,000 per criminal violation and $10,000 per civil violation. Id. Individuals may be fined up to $250,000 per criminal violation, as well as $10,000 per civil violation, and can face up to 5 years in prison. Id. The DOJ uses the United States Sentencing Guidelines to determine criminal penalties, and courts can choose to levy a criminal fine of up to double the gross gain or loss from the unlawful activity against an individual or company, rather than the specific amounts previously stated. Id. (citing 18 U.S.C. § 3571).

Compliance Programs for Private Companies

Although private companies are not subject to the accounting provisions, robust written compliance programs are essential to prevent violations and mitigate penalties. FCPA Resource Guide, supra, at 58.

The DOJ considers the adequacy and efficiency of a company’s compliance program when determining penalties based on many factors, including the size of the company, the type of business the company engages in, and the specific risks associated with its business. Id. Therefore, even smaller, private companies should adopt compliance programs that are proportionate to their operations. See id.

An effective compliance program should include:

• • A clear code of conduct;
  • Risk-based assessment of business activities;
  • Internal controls and expense tracking;
  • Oversight by qualified and independent personnel;
  • Regular employee and third-party training;
  • Due diligence in third-party relationships;
  • Confidential reporting mechanisms; and
  • Consistent enforcement and periodic program review. Id. at 59 – 66.

  Companies should ensure that their employees, agents, foreign business partners, and anyone else conducting business on their behalf are aware of the anti-bribery provisions of the FCPA, what constitutes a violation of the FCPA, and the company’s steps to avoid violations. Id. at 60. Companies should also conduct training for employees and all others who conduct business on the company’s behalf. Kathryn Nickerson, What the U.S. Government can do to Assist U.S. Companies with Respect to Transnational Corruption 7 (2011).

  Conclusion

  Private companies doing business internationally must remain vigilant in ensuring compliance with the FCPA’s anti-bribery provisions. The consequences of noncompliance — both financial and reputational — are severe. Establishing and maintaining a strong compliance framework tailored to the company’s size and risk exposure is essential for effective prevention and mitigation of liability under the FCPA.

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Posted on August 14, 2025 by Katie S. Riles