Compliance professionals, business leaders, and Boards are wondering about the implications of the President's February 10, 2025, Executive Order "Pausing Foreign Corrupt Practices Act Enforcement to Further American Economic and National Security," which directed the U.S. Attorney General to pause enforcement of FCPA for six months and develop revised FCPA enforcement guidance. The EO asserts the statute has been "systematically .... stretched beyond proper bounds" and harms "American economic competitiveness and, therefore, national security."
The EO comes days after an Attorney General memorandum entitled "Total Elimination of Cartels and Transnational Criminal Organizations," which instructs the DOJ FCPA Unit to prioritize foreign bribery investigations related to cartels and Transnational Criminal Organizations, as well as decentralizes authority to pursue those cases to United States Attorneys' Offices around the country. The changes under the AG's memo are to continue for 90 days and then may be renewed or made permanent.
The EO states that FCPA enforcement has "drain[ed] resources from both American business and law enforcement." Whatever one might say about whether FCPA enforcement has been too hard on business – and we ourselves have seen too many good companies and people caught up in matters as a result of having to do business with corrupt governmental actors – from a law enforcement perspective, these cases have yielded hundreds of millions of dollars in fines, over $16 billion in the past decade. Those monies go into the U.S. Treasury. The EO also argues that enforcement has been "overexpansive ... against American citizens and business," although a review of these matters reveals that foreign companies make up over 40% of these cases.
Turning to the practical question of, "What now? Does anti-corruption compliance still matter?" facing compliance professionals, companies, and Boards, we share the following observations.
DOJ enforcement may become rare in the short term, but will also be less predictable. Where it does occur, that will likely be because the administration views the case as aligning with other goals. For example, due to President Trump's view that the FCPA has harmed American competitiveness, foreign companies may be even more likely to be targets. Companies doing business in certain countries or regions could be scrutinized – the Attorney General's memo appears focused on Mexico and Latin America. (Although the memo's broad language could apply to cartel activities in any part of the world.) The Attorney General's memo may also direct attention to financial institutions if perceived to be facilitators of cartel activity.
Moreover, as the EO focuses so heavily on assertions around national security, enforcement could focus on activities in countries perceived to be adverse to U.S. trade interests. Recall the "China initiative" under President Trump's first term, which focused on companies operating in China and invoked the FCPA and other criminal statutes.
The greater lack of predictability will likely extend to how the Department approaches any particular case, including resolution. The relatively steady enforcement over the past two decades by a centralized DOJ unit, accompanied by ever more detailed Department guidance on how it evaluates disclosure, cooperation, and remediation, have led to a degree of shared understanding amongst companies, their counsel, and the government about how a matter will proceed. This DOJ may not feel constrained by prior practices, raising uncertainty and the stakes for companies caught in the crosshairs.
Don't forget about the SEC, and Congress. A large proportion of FCPA cases have been against public companies subject to SEC's FCPA jurisdiction. Moreover, public companies are governed by not only the FCPA's anti-bribery prohibition but also its accounting provisions. The SEC makes frequent use of those provisions to investigate and charge companies that allegedly dissipate corporate assets on fraud and corruption.
Congress has had a laser focus on using its investigative powers on various foreign policy issues, particularly around China. In response to the EO, the Democratic Ranking Member of the Select Committee on the Chinese Communist Party sent a letter to the American Chamber of Commerce in the People's Republic of China to "formally notify your membership" that "Congress retains full authority to investigate corrupt acts by U.S. businesses in China."
Other regulators have ramped up their anti-corruption laws and enforcement mechanisms, particularly the United Kingdom, France, Brazil, South Africa, and Australia. Companies subject to their jurisdiction may still find themselves subject to investigation. In addition, within the U.S., certain state attorneys general may look for novel approaches to enforcement, such as state laws that prohibit conduct that is unlawful, unfair or deceptive and harms investors or consumers.
Most international transactions already include provisions related to compliance with anti-corruption laws, and public sector customers may terminate contracts or concessions obtained through corrupt conduct and debar companies from public procurements.
Tolerance for corrupt behavior has significantly decreased over the past 20+ years amongst those most adversely affected, including not only company executives and employees who want to do business cleanly, but also the populations in countries suffering from government corruption. Whistleblower numbers tend to increase year-on-year. Complainants will come forward if corrupt business practices increase or are perceived to increase. Reputational harm, as well as legal risk of suits by institutional investors, shareholders, and business partners and counterparties, should not be discounted.
Ethics & compliance programs take years to build and test through experience to be effective. If such programs are not maintained, rebuilding them will be costly and time consuming. Companies will be less able to prevent and detect misconduct that, sooner or later, can have heavy consequences. Moreover, in our experience, the business practices that often accompany corrupt payments – lack of transparency and accountability in business decisions, risky third-party business partners, a focus on short-term rather than long-term business success, money laundering and even self-dealing – are ones that forward-looking companies reject and do not want their employees and executives engaged in.
Last but certainly not least, the statute of limitations is five years (plus three more if the government needs further time to gather evidence abroad) and starts from the last act. That leaves plenty of time for a future administration to enforce the statute based on conduct during the next four years.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
