On December 22, 2023, President Biden signed into law the Foreign Extortion Prevention Act (“FEPA”). FEPA is aimed at the “demand” side of foreign corruption and bribery, making it unlawful for any foreign official to demand a bribe from a U.S. issuer or domestic concern or to make such a demand within the United States. FEPA is intended to serve as a complement to the Foreign Corrupt Practices Act (“FCPA”), which for decades has made it unlawful for a U.S. issuer to offer a bribe to a foreign official in order to obtain an improper business advantage. While the FCPA already addressed the payment of bribes to foreign officials, FEPA now criminalizes the request from foreign officials as well. 

FEPA contains a broad prohibition on corrupt activity and applies to a broad category of public officials. First, FEPA makes it unlawful for any foreign official to “demand, seek, receive, accept, or agree to” receive “anything of value” in exchange for performing or not performing an official act or conferring any improper advantage on the payor. Like the FCPA, the actions or omissions by the foreign official nominally must be made in connection with the payor retaining, directing, or obtaining business. 

Next, FEPA is notable in that it adopts an expansive definition of “foreign official.”  FEPA’s definition includes, of course, what are traditionally thought of as “officials,” including “any official or employee” of a foreign government or subdivision or instrumentality thereof and “any senior political official.” The definition also includes, however, an official or employee of a “public international organization” and any person acting in an official or unofficial capacity on behalf of a foreign government. Unlike the FCPA, FEPA’s definition of “public official” does not include candidates for public office. 

A violation of FEPA carries with it the potential for stiff penalties. If convicted, a foreign official “shall be” fined not more than $250,000 or three times the monetary equivalent of the thing of value solicited or received, imprisoned for not more than 15 years, or both. And finally, FEPA requires the Department of Justice to report annually to the House of Representatives on, among other things, the effectiveness of the law and international efforts to assist in fighting corruption and bribery. 

While FEPA serves as a “bookend” to the FCPA, criminalizing the demand for bribery where the FCPA addresses the supply, there are some important differences. First, the Securities and Exchange Commission (“SEC”) plays no role in enforcing FEPA.  Next, the criminal penalties are higher under FEPA than the FCPA. The maximum penalty under the FCPA is $250,000 or twice the benefit obtained and five years in prison. The definition of “foreign official” is also different.  While FEPA does not include a person running for office, it otherwise broadens the definition by including persons acting in an “unofficial capacity.” And finally, FEPA does not include affirmative defenses available under the FCPA. For example, it is not a violation of the FCPA to provide a benefit to a public official that is permissible under the laws of that official’s home country. That request for payment, however, would be unlawful under FEPA even if it is permitted in the official’s home country. 

It remains to be seen whether enactment of FEPA may signal a renewed focus on foreign corruption and bribery generally or whether it will lead to the issuance of press releases announcing indictments of foreign officials with few actual prosecutions. It also remains to be seen if the Department of Justice will be successful in the extraterritorial application of U.S. criminal law or whether foreign jurisdictions will cooperate in enforcing U.S. law against their own government officials. 

But either way, U.S. companies should continue to ensure that their foreign corruption controls and compliance programs are up to date. Anti-corruption training should include the new definitions and restrictions set out in FEPA. The new restrictions should also be included in any due diligence involving relevant third-party transactions and monitoring of those relationships. And, of course, the whistleblower hotline must remain readily accessible and be prepared to respond to reports of potential violations of FEPA. While there is generally no formal duty to report potential violations of law in the United States, the U.S. Department of Justice maintains a Corporate Enforcement Policy which lays out criteria for evaluating and potentially rewarding self-disclosure and cooperation in connection with the FCPA and other corporate enforcement matters. It is yet to be determined if and how such guidance will be applied to FEPA.

In enacting FEPA, Congress has closed the loop on foreign bribery, holding accountable foreign officials who solicit or receive bribes. It remains to be seen what practical effect FEPA has on U.S. businesses, if any. But even while the dust settles on the new law, U.S. companies should take the opportunity to ensure that their anti-bribery programs are fully up to date and reflect the new standards and restrictions set out in FEPA.