On February 10, 2025, President Trump signed an executive order (the “Order”) pausing enforcement of the Foreign Corrupt Practices Act (the “FCPA”). The Order and corresponding fact sheet characterize current enforcement of the FCPA as “overexpansive and unpredictable” claiming that it harms American companies “for routine business practices in other nations.” In general, the FCPA makes it unlawful for companies and certain individuals to bribe foreign government officials in order to obtain or retain business. For US listed public companies, the FCPA, among other laws, also requires compliance with accounting rules including the accurate recordkeeping of corporate transactions and maintaining an adequate system of internal accounting controls.
Background on the Executive Order
For 180 days (plus an additional 180-day extension if needed), the Order directs the Attorney General (the “AG”) to: (i) pause any current enforcement actions under the FCPA and cease initiating new FCPA investigations; (ii) revise current guidelines and policies with a directive to promote American economic competitiveness; and (iii) initiate any future investigations or enforcement actions exclusively under those revised guidelines. Additionally, any future FCPA investigations or enforcement actions will require the AG’s authorization to commence.
Key Considerations
1. Only congress can eliminate or revise the FCPA.
While the US Department of Justice (the “DOJ”) can pause enforcement of FCPA-related actions to review and update its guidance, only Congress has the power to completely eliminate or revise the FCPA, absent a court challenge seeking to invalidate the statute. Absent a change from Congress or the courts, the FCPA will remain on the books.
2. The FCPA statute of limitations extends past January 2029.
Even under updated guidance from the DOJ, the FCPA’s statute of limitations is still applicable and extends beyond January 2029, the end of the president’s term. For example, the statute of limitations for an anti-bribery violation is five years and for an accounting violation it is six years. The FCPA also provides enforcement agencies multiple avenues to apply extensions beyond statutory limitations. Accordingly, a change in presidential administration philosophy in 2029 could lead to FCPA enforcement against actions taken in 2025 that are not currently being prioritized by the DOJ.
3. Other enforcement avenues under the FCPA or similar laws exist.
The Order did not include or address the Securities and Exchange Commission’s (the “SEC”) role in civil enforcement under the FCPA. At this time, there is no indication as to whether the SEC will pursue civil violations under the FCPA. Furthermore, other federal criminal statues (e.g., mail or wire fraud, bribery, foreign extortion etc.) and state anti-corruption statutes remain in effect and are enforceable. Additionally, the Order did not eliminate or pause the DOJ’s policies regarding whistleblower awards and voluntary self-disclosure that encourages individuals and corporations to disclose or report misconduct. Therefore, while enforcement under the FCPA may slow down or grind to a halt during this administration, be prepared for the continued civil or criminal enforcement of comparable FCPA violations under connected or similar laws.
Moving Forward
Until the DOJ provides updated guidance, your FCPA related corporate policies and programs should continue to address and mitigate risks associated with enforcement under the FCPA and comparable civil or criminal actions.
To prepare for these changes, consider: (a) evaluating whether your corporate compliance policies reflect only FCPA enforcement actions or if key terminology reflects broader anti-bribery or corruption as a whole; and (b) reviewing existing contractual obligations which may require companies to maintain FCPA compliance programs. Confirm that any changes to your FCPA compliance programs would not trigger negative contractual obligations or repercussions.
Conclusion
The uncertainty stemming from the Order has left many questions on how best to navigate FCPA compliance. As such, maintaining your current FCPA compliance program and taking a cautious approach to updating related policies can help mitigate future enforcement risk and while companies adjust to the evolving enforcement landscape. If you have any questions about the effect of the Order on your company, please contact a member of Harter Secrest & Emery’s Securities and Capital Markets group.