• President Biden recently signed into law the Foreign Extortion Prevention Act (“FEPA”), enabling federal prosecution of non-U.S. government officials who solicit or receive bribes.
• FEPA complements the Foreign Corrupt Practices Act (the “FCPA”), which focuses on the supply of bribes, by covering the demand for and receipt of bribes, thereby closing a longstanding gap in U.S. prosecutorial authority against foreign corruption.
• The legislation demonstrates that the U.S. government takes anti-corruption enforcement efforts seriously.

This OnPoint summarizes key points that individuals and companies should consider in light of the recent passage of FEPA.

Background

While the FCPA primarily enables prosecution of payers of bribes, FEPA complements the FCPA by enabling prosecution of non-U.S. officials who demand or receive bribes. In the absence of a law like FEPA, when prosecuting anti-corruption cases, the U.S. Department of Justice (“DOJ”) prosecuted bribe recipients by relying on a creative mix of anti-money laundering statutes, wire fraud statutes, and economic sanctions regulations. With FEPA, enforcement authorities in the United States have a statutory basis to prosecute both sides of a bribe.

The Biden Administration’s approval of the bill should come as no surprise, as the fight against corruption has been identified as one of President Biden’s “core” national security objectives. With FEPA, the United States now joins other countries, like the United Kingdom, France, and Switzerland, in revamping bribery laws to close potential gaps.

FEPA makes it unlawful for a non-U.S. official, acting in an official or unofficial capacity, “to corruptly demand, seek, receive, accept, or agree to receive or accept, directly or indirectly, anything of value,” for themselves or a third person, using the mails or any means or instrumentality of interstate commerce, from a domestic concern (as defined in section 104 of the FCPA), an issuer (as defined in the Securities Exchange Act of 1934) (the “Exchange Act”), or any other person while in U.S. territory, in exchange for (1) influence over an official act, (2) the performance or omission of an act in violation of the official duty of the foreign official or person, or (3) conferring an unfair business advantage on a person.

As drafted, FEPA amends the domestic bribery statute in the United States and introduces new language that is distinguishable from the FCPA. We describe some primary takeaways you should know about FEPA below.

1. FEPA Sees “Foreign Officials” Everywhere

FEPA defines “foreign official” broadly as any official or employee of a non-U.S. government, department, agency, or other instrumentality (as well as officials and employees of public international organizations) and any person acting in his or her official or unofficial capacity on behalf of such government entities. FEPA is distinct from the FCPA in capturing actions taken in an individual’s unofficial capacity. It also captures employees of foreign government “instrumentalities,” likely including state-owned enterprises, as well as “senior political figures,” which could apply to senior executives of state-owned enterprises, political party officials, and close family members of such officials. Notably, under the FCPA, the violative action must be conducted within the course of one’s official duties, whereas the FEPA’s violative actions may be conducted in one’s official or unofficial capacity.

2. Foreign Officials Demanding Bribes Cannot Hide

FEPA expressly applies outside of the United States, but prosecutors will have to establish a U.S. nexus to charge cases under the law. As drafted, a FEPA prosecution requires the involvement of a U.S. person, U.S. company, issuers (as defined in the Exchange Act), or activity within the United States. Further, a FEPA violation must involve the use of U.S. mails or U.S. interstate commerce. Given the applicability to foreign officials who may not be present inside the United States, apprehending these individuals for prosecution may be challenging. Nevertheless, FEPA’s express reference to extraterritorial jurisdiction overcomes the presumption against extraterritorial application, and the DOJ may have other tools at its disposal to assist in prosecuting violators, including freezing assets, apprehending violators upon entry into the United States, and others.

3. Stay Tuned for Applicability of FEPA to Conspiracy Cases

One area to monitor is how broadly U.S. enforcement authorities will interpret FEPA. For example, it remains to be seen whether conspiracy to demand or receive bribes could lead to successful prosecution under FEPA. While courts have found that the FCPA does not support conspiracy charges, they have concluded that the domestic bribery statute can give rise to such charges. Given FEPA’s placement in the domestic bribery statute, courts may find that Congress intended for conspiracy to apply to it as well. Interestingly, FEPA expressly states that it is not to be construed as encompassing conduct that would violate the FCPA, “whether pursuant to a theory of direct liability, conspiracy, complicity, or otherwise.” While it is unclear how the DOJ or U.S. courts will interpret this distinction, Congress may have included this language to make clear that conspiracy to violate FEPA is a crime that could be prosecuted under the statute. The ability to prosecute conspiracies to violate FEPA will broaden the scope of potential prosecutions covered by the statute in this regard.

4. FEPA May Add Complexity to FCPA Settlements

Historically, we have seen enforcement authorities prosecute individuals and companies under the FCPA. It will be interesting to monitor whether and to what extent FEPA impacts FCPA prosecutions. For example, when pursuing enforcement actions against individuals, corporate executives became a priority for enforcement authorities in anti-corruption matters, and companies in front of enforcement authorities in settlement discussions were pressed to provide evidence regarding the knowledge and participation of corporate executives in potential misconduct. FEPA may add a further wrinkle, requiring companies to disclose information regarding the misconduct of foreign officials as part of FCPA settlements. This could, in turn, raise complicated data privacy and state secrecy issues in the conduct of anti-corruption investigations. It is also entirely possible for FEPA-related prosecutions to implicate companies as well, as foreign officials agree to relaxed settlements if they cooperate with enforcement authorities in their efforts to prosecute corporate wrongdoers.

5. It’s Expensive to Violate FEPA

FEPA is a criminal statute and comes with serious penalties. Unlike the FCPA, FEPA does not confer authority to the SEC to bring civil enforcement actions in addition to criminal actions – only federal prosecutions are available under FEPA (as currently drafted). Penalties could include up to 15 years in prison or monetary penalties of not more than $250,000 per violation or up to three times the monetary equivalent of the thing of value involved in the exchange, or both imprisonment and the fine. As the statute does not specify how the monetary penalty will be determined (other than a monetary ceiling), enforcement authorities will likely have discretion to determine which amount will apply.

Conclusion

As discussed above, anti-corruption compliance is a priority of the Biden Administration’s national security plan and FEPA provides another tool for enforcement authorities to ensure such compliance. DOJ’s increased activity in enforcing the FCPA should inform us as to what we can expect with the enforcement of FEPA. Companies should consider reviewing their compliance programs in order to manage emerging risks. We will monitor this space as FEPA’s interpretation and enforcement unfolds.