Foreign Corrupt Practices Act (FCPA) Definition
Enacted in 1977, the Foreign Corrupt Practices Act is a federal law that prohibits companies from paying bribes to foreign political figures and government officials for the purpose of obtaining business. FCPA enforcement has increased significantly over the past three years.
The Foreign Corrupt Practices Act has two sets of provisions: The accounting provisions, which are enforced by the Securities and Exchange Commission; and the anti-bribery provisions, which are enforced by the U.S. Department of Justice.
The three types of entities prohibited from making improper payments are:
- Issuers
- Domestic concerns
- Foreign nationals and businesses
Issuers
Companies that are required to file reports with the Securities and Exchange Commission and/or have securities registered in the U.S. are considered issuers.
Domestic concerns
Domestic concerns are any person or business entity, in addition to nationals and residents of the U.S. Entities that have their principal place of business in the U.S., or who are organized under the laws of the United States of America, are included.
If either a domestic concern or an issuer uses any means or instrument of interstate commerce (e.g. the U.S. mail), they may be held liable for any act that promotes a corrupt payment. This is also the case if such an act occurs outside of the U.S.
Foreign nationals and businesses
Unlike the first two entities, foreign nationals and businesses are only liable for acts that promote a corrupt payment within the U.S. They are not liable for acts committed outside of the U.S.
Third parties and agents
In the cases of third parties and agents, they are liable under the same conditions as the issuer, domestic concern, or foreign national or business they are acting on behalf of.