Experts Weigh In On Executive Order Pausing FCPA Enforcement At American Bar Association White Collar Conference

On February 10, 2025, President Donald Trump signed Executive Order No. 14209, titled "Pausing Foreign Corrupt Practices Act Enforcement to Further American Economic and National Security." The purpose of the executive order was to rein in a "steadily increasing degree" of enforcement of the Foreign Corrupt Practices Act (FCPA), resulting in what the Administration framed as impediments to the nation's ability to compete for business overseas.

Specifically, the executive order described past use of the FCPA as "overexpansive and unpredictable," resulting in "actively harm[ing] American economic competitiveness and, therefore, national security." Essentially, it purports to "advance American economic and national security by eliminating excessive barriers to American commerce abroad" by directing Attorney General Pam Bondi to review FCPA guidelines and policies for a period of 180 days in order to:

• Cease initiation of new FCPA investigations or enforcement actions, except upon determination by the Attorney General that an exception applies;
• Conduct a detailed review of existing FCPA investigations or enforcement actions to determine that such matters accord with the Administration's policies on FCPA use; and
• Issue updated guidelines or policies to promote America's economic interests.

Concentrating decision making at the top, the executive order requires the Attorney General to authorize the initiation or continuation of any FCPA investigations or enforcement actions, without reserving to the Attorney General delegatory authority.

Potential Business Impacts

At its core, the FCPA is designed to prevent U.S. companies and individuals from engaging in bribery of foreign officials to obtain or retain business, thereby promoting ethical business practices and fair competition. A moratorium on its use is likely to have significant and multifaceted impacts, including:

Shift in Enforcement Priorities

While unclear as to duration, a pause of FCPA utilization suggests a relaxation of traditional corporate enforcement by the federal government. However, the Department of Justice did recently signal an inclination to deploy FCPA enforcement measures in connection with investigating and prosecuting cartels and transnational criminal organizations (TCOs) stating:

The Criminal Division's Foreign Corrupt Practices Act Unit shall prioritize investigations related to foreign bribery that facilitates the criminal operations of Cartels and TCOs, and shift focus away from investigations and cases that do not involve such a connection. Examples of such cases include bribery of foreign officials to facilitate human smuggling and the trafficking of narcotics and firearms.

Possible Increased Corruption and Unethical Practices

Absent traditional modes of enforcement in the FCPA space, U.S. companies may feel emboldened to engage in practices they earlier might have been reluctant to pursue. Such conduct would not come without considerable risk, given that the FCPA remains a criminal statute carrying a five-year statute of limitations, potentially extended another three years through tolling statutes available under mutual legal assistance treaties. Companies inclined to engage in business practices arguably violative of the FCPA during the pause may face increased legal and financial risks if enforcement resumes later.

Reputational Risks

Pausing FCPA enforcement could damage the global reputation of the United States and its businesses, inviting a perception that U.S. businesses are more likely to engage in corrupt business practices.

Internal Compliance and Corporate Governance Issues

Companies may reduce their investment in compliance programs and internal controls designed to prevent FCPA violations in response to the pause in enforcement. This could lead to broader issues of corporate governance and financial mismanagement, as the FCPA also includes provisions related to accounting and record-keeping.

The FCPA Moving Forward

The future of the FCPA under the current Administration was top of mind during the American Bar Association's 40th White Collar Conference held in Miami, Florida, last week. During a panel discussion titled "The Foreign Corrupt Practices Act: Recent Developments and Government Priorities," defense experts in the field of FCPA enforcement weighed in with their thoughts as to the future of FCPA enforcement during these uncertain times. One panelist interpreted Attorney General Bondi's February 5 cartel and TCO memorandum, as augmented by the executive order, as a clear message that there will be "not that many, if any" instances of FCPA enforcement in the near future. Observing the executive order's reference to specific industries that the pause on FCPA enforcement purportedly is designed to benefit—"critical minerals, deep-water ports, or other key infrastructure or assets"—the panelist remarked that reference to these industries portends a potential focus by the Administration "on non-U.S. companies that compete with the United States in areas that the executive order points out." In other words, the Administration could use the FCPA to target international corporations or sovereigns that compete with the United States in these enumerated industries.

Another presenter reiterated what became a common refrain at the conference, stating that a future of nonenforcement of the FCPA, at least in the coming months or years, is "squarely on the table." In an environment of nonenforcement, the presenter noted that it is unlikely U.S. corporations with an international presence will invest the same level of resources in FCPA compliance as in years past. That presenter also envisioned an environment where corporations may be less inclined to self-report any identified FCPA breaches.

A third speaker on the panel noted that despite the pause on enforcement, the statute still exists and is undergirded by a years-long limitations period. The speaker believes that stakeholders in U.S. corporations, including directors with fiduciary duties to their shareholders, are unlikely in exercising their business judgment to "look past red flags on the theory that the government will not enforce" the statute. He continued, "As a director, it's a tough decision to take something with a potential eight-year statute of limitations and just blow it off." Noting the considerable expense associated with corporate monitorship, one panelist remarked that companies under such government-mandated oversight for past FCPA enforcement sanctions "would be well-served to revisit and ask to be relieved" of these obligations.

Only time will tell what the FCPA will ultimately become under the current Administration. While an Attorney General memorandum and subsequent executive order provide some framework, little if any detail was provided by the Administration as to how the pause will affect current or future FCPA investigations or enforcement actions. Anecdotally, the pause has had certain and definable effects on at least one active matter. Earlier this month, a newly sworn-in interim U.S. attorney for the District of New Jersey moved a district court to adjourn a trial scheduled to commence days later, citing the government's need to assess the prosecution in light of the executive order. The case involves allegations of FCPA violations against the former president and former general counsel of Cognizant Technology Solutions Corp.

Further commenting on the current environment of uncertainty of FCPA enforcement, a presenter on the panel mentioned, "until [we] get guidelines in the coming month, [we] really do not know what's going to happen." Another speaker likened the situation to "build[ing] the plane while flying it." Noticeably absent from the panel discussion was any perspective from inside the DOJ, as it declined to send a representative to speak on its behalf at the conference this year. In the absence of more complete guidance on the Administration's future decisions on use of the FCPA, corporations will have to decide how or if to allocate considerable resources for internal FCPA compliance and oversight. Directors and other corporate stakeholders would be wise when making these decisions to appreciate that while the FCPA may be paused today, it has not gone away and could resume with enforcement sometime in the future when any prior conduct's limitations period survives.

For More Information

If you have any questions about this Alert, please contact William M. McSwain, Eric A. Boden, Emily Duffy, any of the attorneys in our White-Collar Criminal Defense, Corporate Investigations and Regulatory Compliance Group or the attorney in the firm with whom you are regularly in contact.