Overview of the Foreign Extortion Prevention Act
On December 14, 2023, the U.S. Congress (Congress) passed the Foreign Extortion Prevention Act (FEPA), as a part of the Fiscal Year 2024 National Defense Authorization Act. The FEPA, which received bipartisan support, makes it a crime for a foreign official to corruptly solicit or receive a bribe when certain jurisdictional touchpoints are present. The legislation is intended to address the "demand side" of foreign bribery, an area not addressed by the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA) which only extend to the bribe payer—or "supply side." The legislation is expected to be signed into law by President Biden in the coming days.
Under the FEPA, a "foreign official" can be prosecuted for corruptly demanding, seeking, receiving, accepting, or agreeing to receive or accept, directly or indirectly, anything of value from (1) any person while in the territory of the United States; (2) an "issuer"; or (3) any "domestic concern"1 in return for being influenced in the performance of an official act, being induced to do or omit an act in violation of an official duty, or conferring any improper advantage in connection with obtaining or retaining business for or with, or directing business to, any person.2
The language and structure of the FEPA are similar to the FCPA. However, there are differences beyond the "demand side" versus "supply side" focus of the respective statutes. One notable difference is their respective definition of the term "foreign official." Under the FEPA, the term "foreign official" is defined to include: (1) any official or employee of a foreign government or any department, agency, or instrumentality thereof; (2) any senior foreign political figure; (3) any official or employee of a public international organization; (4) any person acting in an official capacity for or on behalf of a government, department, agency, instrumentality, or public international organization; or (5) any person acting in an unofficial capacity for or on behalf of a government, department, agency, instrumentality or a public international organization.3 The FEPA definition expands the definition of a "foreign official" beyond the FCPA definition through its inclusion of "any person acting in an unofficial capacity for or on behalf of a government, department, agency, instrumentality or a public international organization." In addition, unlike the FCPA, the FEPA addresses the conduct of "senior foreign political figures,"4 rather than making reference to officials of foreign political parties or candidates for foreign political office like the FCPA.
The FEPA will be added to the domestic bribery statute (18 U.S.C. § 201). Penalties for violating the FEPA will include imprisonment of up to 15 years and a fine of up to $250,000 or three times the value of the bribe (whichever is greater).
The FEPA also requires the Department of Justice (DOJ) to submit an annual report to Congress detailing the prevalence of conduct covered by the statute as well as the DOJ's effectiveness in enforcing the statute.
The FEPA Bolsters the Biden Administration's Focus on Preventing International Corruption
The enactment of the FEPA to directly criminalize the corrupt conduct of bribe-seeking foreign officials is consistent with the Biden Administration's commitment to combatting international corruption. In March 2023, the White House issued a fact sheet detailing its recent accomplishments and renewed commitment to the U.S. Strategy on Countering Corruption. In the fact sheet, the White House detailed the creation of new boards and federal policies aimed at combatting corruption domestically and abroad, the coordinated efforts between multiple federal agencies to prevent illicit finance and punish those who engage in corrupt acts, and the ways in which the Biden Administration is collaborating with foreign governments and international bodies to facilitate law enforcement partnerships, cooperation, and information-sharing across the world, with the goal of promoting a corruption-free international economic system.
The enactment of the FEPA will provide the DOJ with an additional tool to prosecute international corruption by directly criminalizing the conduct of corrupt foreign officials who solicit or receive bribes in situations where there are jurisdictional touchpoints to the U.S. In the absence of such a statute, the DOJ has relied heavily on the Money Laundering statutes to target corrupt foreign bribe recipients. For example, in 2022, the DOJ announced or resolved money laundering charges against six foreign officials in connection with their roles in foreign bribery schemes and related conduct.5 The FEPA will expand the DOJ's ability to bring cases against corrupt foreign officials in the future, because, unlike the Money Laundering statutes, the FEPA does not require any nexus to the U.S. banking system or that the prosecutors prove a predicate offense, and the FEPA also criminalizes the corrupt solicitation or demand for a bribe in addition to the receipt of the bribe payments.
Jurisdictional Complexities
The FEPA explicitly states that offenses under the statute are subject to extraterritorial federal jurisdiction. Given this clear statement of legislative intent and the legislation's inclusion of the instances that create a sufficient nexus with the United States, consistent with Congress's Interstate Commerce Clause authority, the FEPA should overcome the general presumption against extraterritorial application. As a result, even if not present in the United States, foreign officials could be indicted in federal court (and apprehended upon entry) or have their assets frozen if they are deemed to be associated with a violation of the law. However, a number of practical challenges remain, including the political complexities of maintaining diplomatic relations whilst charging foreign officials.
Implications
While the FEPA does not expand liability for companies, it is an important development in the U.S. anti-corruption framework and signals the U.S. government's continued commitment to pursing and prosecuting international corruption. With the pending enactment of the FEPA potentially causing increased DOJ enforcement against foreign officials on the "demand side" of corruption cases, companies may face increased scrutiny and see an increase in anti-corruption cases being opened at DOJ. Companies should continue to develop and maintain robust, risk-based compliance programs that include regular anti-corruption trainings. Companies should also consider updating training for employees who interact with individuals who may fall within the FEPA's expanded definition of a "foreign official." In addition, with DOJ potentially expanding its ability to prosecute foreign officials, it is possible that the DOJ may increase its requests and expectations for cooperation from companies in connection with these matters.
Footnotes
1. A "domestic concern" includes U.S. citizens, nationals, and residents, as well as entities with a principal place of business in the United States or organized under the laws of the United States. 15 U.S.C. § 78dd-2(h)(1).
2. National Defense Authorization Act for Fiscal Year 2024, S. 2226, 118th Cong. § 5101(2).
3. National Defense Authorization Act for Fiscal Year 2024, S. 2226, 118th Cong. § 5101(1)(C).
4. A "senior political figure" includes current or former senior officials in executive, legislative administrative, military, or judicial branches; officials of a major foreign political party; or executives of a foreign government-owned commercial enterprise as well as their immediate family members, persons known to be close associates, and any corporation, business, or entity formed by, or for the benefit of, such individuals. 31 C.F.R. § 1010.605(p).
5. WilmerHale, 2022 Global Anti-Bribery Year-in-Review, at 53 (Feb. 10, 2023), https://www.wilmerhale.com/insights/client-alerts/20230209-global-anti-bribery-year-in-review-2022-developments-and-predictions-for-2023.
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