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Foreign Extortion Prevention Act – USA now also criminalizes the “demand side” of corruption 

On December 14, 2023, the United States House of Representatives voted to codify passive corruption in connection with foreign public officials.

Under US law, only the giving or offering of bribes abroad was previously considered a criminal offense.  The ‘Foreign Extortion Prevention Act’ (FEPA) remedies this by also criminalizing the demand side of bribery. Foreign public officials will now commit a criminal offense if they solicit or accept bribes from a company under U.S. jurisdiction, U.S. citizens or other persons residing in the United States. Literally, FEPA prohibits a foreign official from directly or indirectly soliciting, accepting, or agreeing to accept anything of value and/or benefit to (i) influence the performance of an official act, (ii) induce the public official to act or refrain from acting in violation of his or her official duty, or (iii) confer an improper advantage in connection with obtaining or retaining business.

With the FEPA, the US legislature has created the regulatory counterpart to the Foreign Corrupt Practices Act (FCPA), which has been missing for decades, and now authorizes US authorities to take action against foreign public officials who solicit and accept bribes. The law provides for two different penalties: a fine of no more than 250,000 US dollars or three times the monetary value of the benefit accepted, or a maximum prison sentence of 15 years. A combination of a fine and a prison sentence is expressly provided for in the legal text. The FEPA is therefore a further step in the increasingly globalized fight against corruption, in which law enforcement authorities cooperate at an international level.

Impact on compliance officers and corporate compliance departments?

In the short term, the introduction of FEPA will change little for corporate compliance officers, as the law is primarily aimed at corrupt public officials. However, it will be interesting to see what obligations to cooperate will be imposed on companies involved in investigations and proceedings by the US authorities against accused public officials.

In any case, the adoption of FEPA, in conjunction with the DOJ’s enforcement activities and the US sanctions imposed in recent years against those involved in bribery offenses, shows that fighting corruption remains a high priority for the Biden Administration. U.S. companies doing business abroad and government officials, as well as government entities and companies and their representatives, should be aware of FEPA and prepare effectively for its enforcement.