FCPA Enforcement Changes: A strategic approach on Internal Investigation and Compliance

The Foreign Corrupt Practices Act (FCPA) has been a critical tool in the U.S. arsenal against international corruption and bribery. However, recent executive orders and Department of Justice (DOJ) guidance under the second Trump administration have introduced significant changes to FCPA enforcement. Compliance Officers and Investigation Leads are getting questions by their management on the impact on their business and how to navigate the uncertain state. In this article we provide you an overview of these changes, their implications for businesses, and strategic recommendations for navigating this evolving landscape.

Executive Order on FCPA Enforcement

On February 10, 2025, President Donald Trump signed an executive order titled “Pausing Foreign Corrupt Practices Act Enforcement to Further American Economic and National Security.” This order implements a 180-day pause on criminal enforcement of the FCPA, with the possibility of an extension. The administration’s rationale is that FCPA enforcement has become overly broad and unpredictable, negatively impacting U.S. economic competitiveness.

Key Directives of the Executive Order

The executive order outlines several specific actions and considerations:

1. Cease New Investigations: The DOJ is directed to halt the initiation of new FCPA investigations unless an exception is granted by the Attorney General. This pause is intended to allow for a comprehensive review of current enforcement practices and the development of new guidelines.
2. Review Existing Cases: All ongoing FCPA investigations and enforcement actions will be reviewed to ensure they align with the administration’s priorities. This review aims to restore what the administration views as proper bounds on FCPA enforcement and preserve presidential foreign policy prerogatives.
3. Issue Updated Guidelines: The Attorney General is tasked with issuing new guidelines or policies that prioritize American interests, economic competitiveness, and the efficient use of federal law enforcement resources. These guidelines will govern future FCPA enforcement actions once the pause is lifted.

Impact on Non-U.S. Companies

For at least the next 180 days, no new FCPA investigations will be opened, and no new charges will be brought unless explicitly authorized by the Attorney General. This could result in a temporary reduction in FCPA enforcement actions. However, the recent changes in FCPA enforcement may have significant implications for companies outside of the U.S.

1. Increased Scrutiny of Non-U.S. Companies: The executive order suggests that non-U.S. companies may face increased scrutiny under the FCPA, particularly if they are from countries viewed as economic or national security threats to the U.S. This could lead to more aggressive enforcement actions against foreign companies.
2. Reciprocal Enforcement by Foreign Authorities: If the U.S. targets non-U.S. companies more aggressively, foreign governments may reciprocate by targeting U.S. companies under their anti-corruption laws. This could lead to a more challenging regulatory environment for multinational companies.
3. Compliance with Local Anti-Corruption Laws: Non-U.S. companies must continue to comply with local anti-corruption laws, which may be enforced more rigorously in response to changes in U.S. enforcement practices. Companies should ensure their compliance programs are robust and capable of addressing both U.S. and local legal requirements.
4. Potential for Increased Legal and Compliance Costs: The heightened scrutiny and potential for reciprocal enforcement actions may lead to increased legal and compliance costs for non-U.S. companies. These companies may need to invest more in their compliance programs to mitigate risks and avoid penalties.
5. Strategic Business Decisions: Non-U.S. companies may need to reassess their business strategies and operations in light of the new enforcement landscape. This could involve reevaluating partnerships, supply chains, and market entry strategies to ensure compliance with both U.S. and local anti-corruption laws.

Recommended Strategy on Internal Investigations and Compliance Programs

It is essential for companies to maintain robust internal investigations and compliance programs. The rationale behind this strategy is to ensure that businesses remain vigilant against potential violations, even during periods of regulatory uncertainty. Especially in times of regulatory uncertainty, companies must remain vigilant against potential violations. By maintaining effective compliance measures, companies mitigate risks to an appropriate level, prepare for future enforcement actions and demonstrate their commitment to ethical business practices.

Moreover, it is not only the FCPA that requires an effective investigations and corporate compliance program. Further anti-corruption laws in the world's major markets, regulations on other compliance topics and the expansion of regulators' focus from competition and financial flows to product and consumer protection result in further obligations for companies to comply with laws and regulations. Product compliance is just one example of this. 

In addition, new approaches, methods and technologies offer the opportunity to review and optimize compliance structures for effectiveness, efficiency and sustainability right now. Studies confirm that modern compliance management systems can make an effective contribution to corporate strategy, the currently necessary reinvention of business models, optimization of time-to-market and thus competitive advantages. Relieving the burden on operational workforces through these approaches frees up capacity there and enables targeted workforce allocation. There is an opportunity to utilize this potential to make a significant contribution to the future viability of the company. By continuing to uphold strong compliance measures, companies can mitigate risks of non-compliance, prepare for future enforcement actions, and demonstrate a commitment to ethical business practices:

1. Sustain Internal Investigations: Companies currently conducting internal investigations into potential corruption should continue their efforts without significant changes. The DOJ retains the authority to initiate new cases, and the pause on enforcement does not decriminalize corrupt practices.
2. Make your investigation and compliance program fit for the future: Determining the as-is effectiveness and sustainability of existing programs and a comparison with good practices may reveal potential for increased effectiveness, synergies and efficiencies through optimization of your investigation and compliance program by optimized approaches, methods and technologies. The organization is relieved, the acceptance will increase, and the systems have a solid foundation..
3. Stay Alert: It is crucial for companies to remain diligent in their investigative efforts. The statute of limitations for FCPA violations extends up to five years (six for accounting provisions), meaning historical misconduct could still be subject to prosecution.
4. Evaluate Self-Reporting Decisions: The decision to self-report potential violations requires careful consideration. The current regulatory uncertainty complicates this decision, and companies must weigh the potential benefits and risks of self-disclosure.
5. Prepare for Future Enforcement: With the possibility of a new administration in 2029, companies should anticipate that both historical and new misconduct could be prosecuted in the future. It is vital to address the root causes of any wrongdoing, remove culpable individuals, and enhance compliance programs to prevent recurrence.
6. Maintain Compliance Programs: Existing risk mitigation policies and procedures should remain in place. A strong compliance program is crucial for detecting and preventing corruption, fostering ethical business practices, and ensuring overall corporate governance.
7. Monitor Regulatory Changes: Companies should stay informed about any new FCPA enforcement guidelines and policies issued by the DOJ. This will enable them to adapt their internal investigation strategies as necessary.
8. Recognize the Importance of Compliance Representations: Companies often make representations and warranties in various agreements to comply with all applicable corruption laws. These commitments remain in force, regardless of changes in DOJ enforcement priorities.
9. Promote a Strong Compliance Culture: A robust compliance culture supports ethical business practices and decision-making. It also helps prevent and detect fraud, embezzlement, conflicts of interest, and other issues that can harm a company’s reputation and financial health.
10. Focus on High-Risk Industries: Certain industries, such as those involving critical minerals and infrastructure, may face increased scrutiny. Companies in these sectors should ensure their compliance programs are particularly robust to mitigate risks.

By adhering to these strategies, companies can navigate the evolving FCPA enforcement landscape effectively and maintain their commitment to compliance and ethical conduct.