On February 10, 2025, President Donald Trump signed an executive order directing the Department of Justice (DoJ) to pause enforcement of the Foreign Corrupt Practices Act (FCPA), a 1977 law prohibiting US companies and individuals from bribing foreign officials to secure business deals. The administration argues that stringent enforcement of the FCPA places American businesses at a disadvantage compared to international competitors who may not adhere to similar anti-bribery standards.
Attorney General Pam Bondi has also directed the DoJ’s efforts away from FCPA enforcement, instead focusing on the risks of foreign bribery related to cartels and criminal networks, which a previous EO by President Trump has designated as terrorist organisations.
While the intention behind this move is to bolster American economic interests, pausing FCPA enforcement introduces significant compliance risks that could outweigh any short-term competitive gains.
What is the Foreign Corrupt Practices Act (FCPA)?
The FCPA is an anti-bribery statute passed by Congress in 1977. It applies to those with formal ties to the US, such as US nationals or businesses incorporated in the US, as well as foreign nationals and entities who are in the US at the time of the improper conduct. Individuals face between five to 20 years’ imprisonment for each violation. Corporations can be fined up to $2m per violation, and individuals up to $100,000.
The anti-bribery provisions of the FCPA prohibit offering, promising, or giving anything of value, directly or indirectly, to foreign officials in order to obtain or retain business or secure an improper advantage. This includes bribes, kickbacks, or other illicit payments. The law also covers third-party intermediaries such as agents, consultants, or distributors who may act on behalf of companies.
The FCPA does not prohibit facilitation payments made to foreign officials for the purpose of causing them to perform routine governmental actions, such as issuing licences or performing shipping inspections. The FCPA also does not prohibit reasonable, bona fide expenditures associated with a product or contract, or payments expressly permitted under the written laws of the foreign country.
The impact of the FCPA
Since its enactment, the FCPA has been instrumental in promoting ethical business conduct among US companies operating abroad. By criminalising the bribery of foreign officials, the FCPA has helped to level the playing field, ensuring that business success is determined by the quality of products and services rather than illicit payments. This framework has fostered an environment where transparency and integrity are valued, contributing to sustainable economic growth.
Contrary to the administration’s rationale, many companies support the FCPA because it provides a clear legal framework that helps them avoid the pitfalls of corruption. Many companies appreciate the FCPA as it allows them to firmly refuse bribes, viewing bribery as an unproductive cost.
Billions of dollars in fines have been paid by companies as a result of FCPA investigations and prosecutions, including some of the world’s largest companies. French oil giant Total paid nearly $400m in penalties for bribing Iranian officials to gain access to oil and gas fields in the country after a joint US and French investigation. The DoJ investigated News Corp for corrupt payments to UK police officers following a joint investigation with the UK’s Serious Fraud Office (SFO) in relation to the phone-hacking scandal. Teva Pharmaceuticals, the world’s largest manufacturer of generic drugs, reached a settlement with the DoJ for bribing officials in Russia, Ukraine and Mexico.
The compliance consequences of pausing FCPA enforcement
While the Trump Administration has directed a pause on enforcement, the statute remains in place unless Congress passes a new law to repeal it, or it is invalidated by a court. This means that future administrations can restart enforcement, or another executive order can do so also.
The five-year statute of limitations for FCPA cases means that prosecutors could still pursue investigations and build cases during this enforcement pause, anticipating that a future administration may reverse the current policy before the statute expires. This creates a lingering legal risk for companies, as conduct occurring during this period could still be subject to prosecution in the coming years.
Additionally, it remains unclear how the Department of Justice’s policy shift will influence the Securities and Exchange Commission’s FCPA enforcement practices. The SEC retains jurisdiction over publicly traded issuers and their officers, directors, employees, and agents, and may choose to continue its enforcement activities independently of the DoJ’s current stance. This uncertainty underscores the need for companies, particularly those listed on US exchanges, to maintain robust compliance programmes despite the temporary pause in DoJ enforcement.
Despite the DoJ’s shifting priorities, it is unlikely that US Attorneys’ Offices will completely abandon corruption-related prosecutions. Even with FCPA enforcement being paused, prosecutors have other legal avenues to pursue corrupt activities. Traditional statutes such as mail and wire fraud, as well as money laundering laws, remain powerful tools in addressing corrupt practices. These laws can be used to prosecute cases that would otherwise fall under FCPA jurisdiction, allowing US Attorneys to continue targeting individuals and entities involved in illicit activities without directly invoking the FCPA.
US Attorneys’ Offices are likely to find ways to maintain their focus on white-collar crime while technically adhering to the memorandum’s directives. Corruption cases often intertwine with broader financial crimes, and prosecutors may leverage existing statutes to ensure that such misconduct does not go unchecked. This is particularly true in jurisdictions where political pressure demands continued vigilance against perceived bad actors in the corporate world. The expectation for accountability remains strong, and US Attorneys may feel compelled to pursue ‘garden variety’ white-collar cases to demonstrate a commitment to upholding the rule of law, even in the face of shifting federal priorities.
A pause in FCPA enforcement equates to a blanket immunity from legal scrutiny, as other legal mechanisms remain firmly in place to address corrupt practices.
Why it’s vital to maintain FCPA compliance in light of the pause
Despite the federal pause on enforcement of the Foreign Corrupt Practices Act, companies should not interpret this as a green light to relax their compliance efforts. The risks associated with FCPA breaches extend far beyond immediate legal consequences, and the temporary suspension of enforcement does not eliminate the potential for future liabilities. Maintaining rigorous compliance standards remains critical for several key reasons:
Future legal exposure:
The current pause in enforcement is an executive decision that could be reversed by future administrations or legal challenges. Companies that engage in questionable practices during this period may find themselves exposed to prosecution when enforcement resumes. Additionally, ongoing investigations could be reactivated, leaving businesses vulnerable to retroactive penalties for actions taken during this time.
International legal risks:
Many countries have adopted anti-corruption laws similar to the FCPA, such as the UK’s Bribery Act and the OECD Anti-Bribery Convention. Even if US enforcement is paused, companies operating globally are still subject to international legal scrutiny. Breaches in one jurisdiction can trigger investigations in others, leading to multi-jurisdictional legal battles and significant financial penalties.
Contractual and regulatory obligations:
Many companies operate under contracts that require adherence to anti-corruption standards, including those based on the FCPA. Violating these terms could result in contract breaches, litigation, and the loss of valuable business relationships. Additionally, regulators outside the DoJ, including the SEC and US Attorney’s, may continue to enforce related compliance requirements, particularly for publicly traded companies.
Reputational damage and investor confidence:
Regardless of the enforcement landscape, involvement in corrupt practices can severely damage a company’s reputation. News of bribery scandals can quickly spread, leading to loss of customer trust, withdrawal of investor support, and long-term brand erosion. In today’s business environment, where ethical conduct is increasingly valued by consumers and stakeholders, maintaining a strong compliance posture is essential for preserving market credibility.
Internal culture and long-term integrity:
Relaxing compliance efforts can erode a company’s internal culture of integrity and ethical behaviour. Allowing even minor breaches can create a slippery slope, leading to more significant violations over time. A robust compliance programme not only protects against external risks but also fosters a workplace environment where ethical decision-making is the norm, reducing the likelihood of internal misconduct.
Preparedness for regulatory changes:
Given the political and legal volatility surrounding this executive order, companies should remain prepared for rapid changes in enforcement policy. A sudden resumption of FCPA enforcement could catch unprepared companies off guard, leading to costly compliance failures. By maintaining existing compliance frameworks, businesses can ensure they are ready to adapt quickly to any shifts in the regulatory environment.
Overall, while FCPA enforcement may have been paused, the law remains, and the pause presents more long-term risk than short-term benefit to both businesses and the broader economic system. Corruption increases the cost of doing business, erodes trust, and undermines fair competition. Maintaining robust anti-corruption measures is essential for promoting transparency, ensuring a level playing field, and fostering sustainable economic growth. US companies have thrived under the FCPA’s framework, and anti-bribery procedures in their many different forms remain a critical component of ethical and effective business operations.
