The Foreign Extortion Prevention Act (FEPA) signed into law: What it means for companies worldwide

Background

On December 22 as part of the National Defense Authorization Act (NDAA), President Biden signed the Foreign Extortion Prevention Act (FEPA) into law. The FEPA amends Section 201 of Title 18 of the U.S. Code, which generally outlines prohibitions on bribery of government officials.¹

This landmark anti-bribery law renders it a federal crime for foreign government officials to corruptly demand, seek, receive, accept, or agree to accept anything of value, or for another person or a nongovernmental entity to influence the performance of an official act or otherwise confer an improper advantage in connection with obtaining or retaining business for or with any U.S. person or company.² Violations are punishable by up to 15 years in jail and fines of US$250,000 or three times the monetary equivalent of the bribe.

FEPA explicitly confers extraterritorial federal jurisdiction, making it a complementary counterpart to the Foreign Corrupt Practices Act (FCPA) — the 1977 law that makes it unlawful for domestic concerns or issuers to corruptly make payments to foreign government officials to obtain or retain business or attempt to receive an improper advantage.

What does this change?

The provisions of FEPA had been long sought by anti-corruption advocates. Although the United States has been at the forefront of anti-corruption enforcement for many years, the FCPA was somewhat unique in that the FCPA provides for the prosecution of active bribery (allowing for enforcement against the payor), but not passive bribery (by not including the payee). U.S. prosecutors have historically relied on other laws, such as anti-money laundering, wire fraud, and the Travel Act, to pursue non-U.S. officials. The passage of the FEPA fills in that gap and adds teeth to anti-bribery measures as envisaged by proponents of the FCPA.

What this means is that the onus of anti-corruption compliance no longer lies solely on businesses. Instead, the FEPA now adds a new layer of pressure on foreign officials in a more meaningful way.

Following the Department of Justice’s announcements in late 2023 that the Department is ramping up its international enforcement efforts and strengthening global partnerships with other countries’ law enforcement agencies, the passage of the FEPA solidifies the DOJ’s commitment to cracking down on foreign bribery as it relates to payors and payees.

Other effects of the FEPA

The FEPA expands the scope of foreign officials. It is not limited to the somewhat narrow definition under the FCPA that has produced several appellate decisions, but instead includes formal and informal employees or agents of foreign officials, including those working on their behalf in an “unofficial capacity.”³

Additionally, the FEPA incentivizes companies to disclose requests or demands from foreign government officials or their agents to the DOJ. This development is intended to change the playing field for disclosing companies and potential cooperators in bribery cases.

Finally, by amending section 201 rather than the FCPA, FEPA incorporates section 201’s caselaw. By expressly stating that FEPA offenses are subject to extraterritorial federal jurisdiction, FEPA aims to rebut the presumption against extraterritorial application of federal law that has been used successfully by some FCPA defendants. 

Next steps

The FCPA and FEPA will likely be enforced in tandem, though independent prosecutions are possible. Companies that proactively implement, revise, and train employees on anti-bribery and anti-corruption policies will remain best positioned to respond to potential pressures by government officials, or law enforcement inquiries.

If your organization would like to learn more about how to navigate these developments, we encourage you to reach out to one of our many experienced lawyers in your jurisdiction who can help you evaluate the options tailored to your organization’s needs.

Authored by Peter Spivack, Shelita Stewart, and Carina Tenaglia.

References

1 18 U.S.C. § 201.

2 18 U.S.C. § 201.

3 18 U.S.C. § 201.