Governments have created laws and legislations to protect our rights and to prevent unethical practices. The Foreign Corrupt Practices Act (FCPA compliance) appeared in 1977, in some respects, to do both. The law affects any company that sells products or performs services outside the United States of America.
To conduct business from American soil in other countries, you must adhere to FCPA Compliance guidelines. The responsibility rests with your company to conduct their business following the guidelines written in the law. Here are five things you need to know about FCPA compliance policy.
What Is FCPA Compliance?
The Foreign Corrupt Protections Act (FCPA) has two main components. One component deals with accounting practices for all business interests that conduct business outside the United States. The second provision specifically addresses bribery and fraud as these dealings relate to foreign officials.
The first part applies the accounting principles covered under the Securities Exchange Act of 1934. In 1988, the FCPA was amended and then again a decade later. On December 19, 1977, President Jimmy Carter signed the law into effect. As businesses continue to expand globally, the need for a compliance structure grows increasingly more important.
5 Important Things You Need to Know Concerning FCPA Compliance
If your company does business outside the United States, you must abide by FCPA compliance regulations. There are some important things to understand. It is helpful to appreciate the history behind the legislation, and then use that information to help apply the principles to every business interest, that also involves your company. Studying this information can give you the knowledge to keep you company in FCPA compliance.
1: Understand the History to Apply the Principle
To appreciate why the law exists, you should understand a little about the history behind its implementation. In the mid-1970s, it was discovered that hundreds of US companies admitted to potentially illegal payments to foreign government officials.
The amount of these unethical payments was astounding. Estimates projected that political groups outside the United States received over $300 million to facilitate business interests for US companies. One of the most auspicious of these cases was the Lockheed bribery scandal.
Some bribes influenced national tax structures, while others were simple lump sums of cash, paid to gain control over a market. Understanding that any gift, monetary payment, or extenuating courtesy handed to a foreign government official could be grounds for investigation under FCPA compliance policy is vital.
2: Who Is Responsible for FCPA Enforcement?
The US Securities Exchange Commission and the Department of Justice are jointly responsible for enforcing FCPA compliance. Responsibility for governing the companies that do business outside the United States falls within the duties of the SEC. Many times, these two entities work jointly to bring charges and subsequently prosecute violations.
It’s the responsibility of the DOJ to handle enforcement for all matters related to the domestic operations of these companies. Both have the authority to bring criminal charges against businesses that violate the FCPA, but the DOJ issues arrest warrants, official subpoenas and handles the court proceedings.
3: Legal vs. Illegal Payment Guidelines
The authorities have enacted the FCPA to prevent US business interests from making payments to foreign government officials to unfairly alter the course of a business deal. Now, problems begin to appear when gray areas present themselves. What some authorities might consider an illegal payment in one instance may fall outside the spectrum of the law in another.
When an official receives bribe money to actually perform his or her legal duty in some fashion, the money may fall outside the intent of the law. The only way you can be 100% certain your company follows the letter of the law as it applies to any types of foreign payments, is to have your employees educated in FCPA compliance.
We recommend anyone who handles business interests outside the continental United States to successfully complete an FCPA compliance program. The business harbors the burden of responsibility for knowing what payments are legal and which are not. Therefore, providing all employees who deal with these matters the knowledge of the law is the responsibility of the company.
4: What About Third Party Violations?
Frequently a third party will become involved in the business deal with a foreign dignitary. The rules are definitive that if a company should reasonably know that any individual could leverage the outcome of a business deal by influencing a foreign government, they are obliged to act under the law as if that person or persons were part of their company.
Since businesses are responsible for such potential violations, those in charge have created the Anti-Bribery/Anti-Corruption (ABAC) Solutions to assist companies in avoiding such violations. Moreover, the ABAC is part of Third Party Management practices program.
5: How Can You Receive FCPA Compliance Training?
If your job involves guaranteeing your company follows the guidelines of FCPA compliance, there is FCPA compliance training available. If you are responsible for your company’s adherence to FCPA compliance laws, there is FCPA compliance software available that can help provide employees with ongoing training modules.
New laws appear on a regular basis and they update these programs. Also, they provide examinations to ensure a complete understanding of the principles. Violations not only incur hefty fines but also can produce criminal indictments against members of your company. Moreover, they might damage your company’s reputation severely, possibly ending any potential for future business interests in other countries.
Putting It All Together
Finally, keeping these important concepts in mind can act as an FCPA compliance checklist to help assure your company remains in FCPA compliance. If your company conducts business outside the United States, the responsibility to adhere to these laws is your company’s responsibility.
Like many companies, you may have a department dedicated to overseas business. Furthermore, this department should have a staff member who ensures all those involved receive a proper education in FCPA compliance. While it may seem like common sense stuff, any violation can be devastating.