International commerce is an essential aspect of the U.S. economy. However, federal laws like the Foreign Corrupt Practices Act (FCPA) ensure that international trade remains ethical and compliant.
It’s important that companies have a firm grasp of the FCPA. Here are some key points to consider.
Origin of the FCPA
The FCPA was enacted in 1977. The key objectives of this law were to prevent businesses from bribing government officials to gain a competitive advantage. The law also addresses compliance in accounting. Below are the two key components of the FCPA:
- Anti-bribery provisions: Businesses must not offer anything of value to foreign officials to influence their actions.
- Accounting provisions: Companies must engage in accurate bookkeeping and record keeping to prevent corrupt practices.
The FCPA applies to companies, citizens, foreign entities listed on U.S. stock exchanges and third parties acting on behalf of such entities. Any misconduct that involves U.S. entities or the U.S. financial system can trigger legal action under this law.
How to avoid FCPA charges
It is essential to form a strategy that ensures FCPA compliance. This can help you avoid fines, reputational damage and even imprisonment. Some useful actions include:
- Training employees on FCPA regulations and setting clear anti-corruption policies.
- Carefully vet all clients, business partners and third-party consultants.
- Ensure that you are thorough and transparent with record keeping.
The FCPA demands that businesses conduct themselves in the appropriate manner. If you are facing a legal challenge or have questions about compliance, it may be beneficial to seek further guidance.