5 Things You Need to Know About FCPA Compliance in 2020 - Federal Lawyer

5 Things You Need to Know About FCPA Compliance in 2020

  • Having a strong FCPA compliance policy is critical for companies because these policies are considered during the DOJ’s charging decisions.
  • Nevertheless, business risks and external market conditions are always evolving and necessitate that companies stay abreast of FCPA compliance changes.
  • Five key components of FCPA compliance that should be underscored for 2020 include the following: (1) the DOJ’s new guidance on evaluating compliance policies includes a greater emphasis on anti-corruption prevention; (2) reporting and documentation should be enhanced to provide an adequate paper trail of transactions; (3) the United States is employing more time and resources on combating corruption; (4) the United States has increased coordination with foreign enforcement authorities; and (5) training company personnel is a critical component of a company’s FCPA compliance policies.
  • Consider hiring a team of FCPA attorneys to explain these evolving issues and complexities.

Experienced FCPA Defense Team

If you need legal advice regarding the FCPA or are under investigation for a violation of the FCPA, now is the time to hire a defense attorney.

FCPA charges could result in significant penalties, jail time, and damage to your reputation. The evolving laws and regulations surrounding compliance policies can make it difficult for companies to stay abreast of new risks and respond accordingly.

It is vital that you receive advice regarding new FCPA trends for your company from an experienced FCPA defense team.

At Oberheiden, P.C., our FCPA lawyers have extensive knowledge of the FCPA and a track record of successful defense strategies and litigation.

Do not wait to get in touch with a qualified FCPA defense attorney today. Put Oberheiden, P.C. on your side to fight for your freedom and reputation.

Put our highly experienced team on your side

Dr. Nick Oberheiden
Dr. Nick Oberheiden

Founder

Attorney-at-Law

John W. Sellers
John W. Sellers

Former Senior Trial Attorney
U.S. Department of Justice

Local Counsel

Joanne Fine DeLena
Joanne Fine DeLena

Former Assistant U.S. Attorney

Local Counsel

Joe Brown
Joe Brown

Former U.S. Attorney & Former District Attorney

Local Trial & Defense Counsel

Amanda Marshall
Amanda Marshall

Former U.S. Attorney

Local Counsel

Aaron L. Wiley
Aaron L. Wiley

Former Federal Prosecutor

Local Counsel

Roger Bach
Roger Bach

Former Special Agent (OIG)

Gamal Abdel-Hafiz
Gamal Abdel-Hafiz

Former Supervisory Special Agent (FBI)

Chris Quick
Chris Quick

Former Special Agent (FBI & IRS-CI)

Kevin M. Sheridan
Kevin M. Sheridan

Former Special Agent (FBI)

Ray Yuen
Ray Yuen

Former Supervisory Special Agent (FBI)

Dennis A. Wichern
Dennis A. Wichern

Former Special Agent-in-Charge (DEA)

Introduction to the Foreign Corrupt Practices Act

Enacted in 1977, the Foreign Corrupt Practices Act (“FCPA”) prohibits bribing foreign officials to obtain or retain business and requires companies to maintain adequate books, records, and internal controls in their accounting practices.

Both are critical for companies that transact with foreign officials and conduct business outside the United States.

Having a strong FCPA compliance policy is crucial because it is considered during the DOJ’s charging decisions and may help to demonstrate compliance with the law or lessen potential penalties.

However, because business risks, internal structures of companies, and market conditions are constantly evolving, companies must stay abreast of FCPA compliance updates.

5 Key FCPA Compliance Features in 2020

Below we provide a detailed analysis of five key components of FCPA compliance that you need to know in 2020.

The DOJ released new guidance on evaluating compliance policies that places a higher bar on anti-corruption prevention within companies.

In June 2020, the DOJ published a new version of its guidance on evaluating company compliance programs. The new guidance describes in detail the factors that the DOJ and the SEC use in making charging decisions and determining whether to initiate an enforcement action against companies under investigation for FCPA violations.

Whether the company has a pre-existing, effective compliance program helps the DOJ and prosecutors decide whether the compliance program was effective at the time of the offense and charging decision when determining the (1) form of resolution or prosecution; (2) potential monetary penalty; and (3) compliance obligations in any criminal resolution.

Regarding the charging decisions of prosecutors, the Guidance underscores three “fundamental questions” that prosecutors should ask regarding a company’s compliance program:

  1. (1) Is the corporation’s compliance program well designed?;
  2. (2) Is the compliance program being applied in good faith?; and
  3. (3) Does the company’s compliance program work in practice?

The third question is especially important because it focuses on whether the compliance program is functional or operational in practice, not merely whether it is designed appropriately or looks sufficient on paper.

The new Guidance includes a deeper emphasis on third party transactions and how to respond to identified risks, most notably the risks associated with transactions involving foreign officials.

It also makes companies aware of which factors they should be prioritizing when evaluating their compliance programs and the effectiveness of its operations.

It is advisable for companies to structure their compliance programs with an emphasis on preventing corruption, monitoring transactions, ensuring adequate due diligence and risk assessment, and, above all, making sure that federal authorities recognize the strength of their compliance programs if the company is under investigation.

(2) Companies’ reporting and documentation procedures should be enhanced to provide an adequate paper trail of all transactions, especially for high risk deals with third parties and foreign officials.

An effective compliance policy should immediately identify and correct alleged FCPA violations. Reporting requirements should create an easy mechanism for employees to report suspected illicit payments, bribery, or other suspicious behavior to management on a confidential basis without fear of reprisal.

A company’s compliance program should emphasize quick and easy internal resolution as opposed to reporting the alleged improper conduct to federal agencies. The key to a successful reporting process includes anonymity, promptness, security, and internal resolution.

Factors that are emphasized in the DOJ’s Guidance include whether the company has an anonymized system for the employee reporting of suspicious behavior, whether it is being used, how it is being used, and how the company assesses and responds to such complaints.

Documentation procedures include the accurate recording of bank accounts, cash, and assets; proper accounting of all business expenses regarding third parties and foreign officials; and the periodic audits of a company’s books for consistency and audits of a company’s compliance policies to ensure compliance with the FCPA.

Companies should ensure that these standards are met or surpassed in their compliance programs to detect, avoid, and mitigate FCPA violations within the company.

(3) The United States is employing more time, money, and other resources to combat corruption and strengthen FCPA investigations and prosecutions.

U.S. federal agencies are allocating more resources and efforts into investigating and prosecuting FCPA violations.

For instance, the DOJ’s FCPA unit of prosecutors has almost doubled over the past five years. The FCPA Blog summarizes the highlights of 2019 and notes that the DOJ and SEC prosecuted more than twelve companies in the year, imposing penalties of about $2.9 billion.

FCPA prosecutors now utilize a variety of resources to investigate FCPA violations all around the world, including FBI corruption agents.

Where claims cannot be based on the FCPA, the DOJ often targets and prosecutes individuals and companies for bribery under other statutes, such as anti-money laundering statutes and other fraud-based legislation.

This increases the prosecution risk of all companies, including executives, directors, officers, and company counsel. Both jail time and significant penalties are possible.

(4) The United States has increased cooperation and coordination efforts with foreign enforcement authorities to fight corruption.

Over the past several years, most of the largest settlements for FCPA violations have involved investigations that were coordinated between U.S. and foreign regulatory authorities.

While the SEC and the DOJ are and have always been the primary authorities responsible for investigating and prosecuting FCPA violations, they often utilize referral networks to work with foreign authorities.

For instance, the United States sometimes offers portions of the recovered fines to foreign countries as an incentive for their assistance in investigating suspicious behavior.

This is critical in an increasingly globalized world because bribery, fraud, and corruption possess a grave threat to the safety of U.S. citizens and U.S. companies.

Foreign corruption often leads to weakened foreign governments, which can in turn result in serious threats to the national security to the United States.

In addition to coordinating investigative efforts with foreign governments and foreign regulatory authorities, U.S. federal agencies—such as the SEC—have also conducted training sessions for foreign law enforcement agents regarding FCPA violations and compliance.

(5) Training company personnel—including management, directors, officers, employees, and other parties transacting with the company—in FCPA compliance is a critical component of an effective compliance policy.

Company personnel are often the individuals who are the first to detect possible corruption such as illegal payments or other forms of bribery.

It is therefore imperative that they are trained in what the FCPA is and how it operates, including identifying suspicious behaviors that are indicative of bribery and other “red flags.”

Specific considerations that should be featured in the training programs include how to handle overseas transactions, the laws of other countries that the company is dealing with. and how to monitor performance of the other parties to the contract.

Companies are encouraged to implement these training standards for all employees including management, directors, officers, employees, and third parties—such as agents—and foreign officials who do business with the company.

These training sessions should be mandatory and should impose disciplinary proceedings on those who fail to participate (e.g., termination of employment or termination of contractual relationships with third parties).

Need Advice About FCPA Compliance for 2020?

Allegations of FCPA violations can present many problems for your company and can be accompanied by substantial criminal and civil penalties and imprisonment for the individuals involved in the violations.

If you need legal advice regarding FCPA issues for 2020 or are concerned about a possible investigation into your company, it is time to contact a defense attorney trained in such issues.

At Oberheiden, P.C., we have a well-qualified and experienced team of FCPA attorneys who can advise you on upcoming changes to the regulatory landscape involving anti-corruption legislation and how your company can best prepare for significant changes.

Our attorneys are ready to counsel you regarding legal, regulatory, and compliance issues as relevant for FCPA investigations.

Call us today or contact our office for a free consultation.

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