New FCPA Guidance By DOJ

The Department of Justice ("DOJ") recently announced new guidelines for investigations and enforcement of the Foreign Corrupt Practices Act (FCPA) (here and here). As we reported in February, President Trump issued an Executive Order, that: (1) pauses enforcement of the FCPA for an 180-day period; (2) directs the DOJ to issue revised guidance around FCPA enforcement, consistent with the administration’s national security and foreign affairs interests; (3) calls for the DOJ to review all open and pending FCPA investigations and enforcement matters, taking appropriate action as aligned with the Order’s objectives; as well as (4) contemplates the DOJ reviewing prior enforcement actions to determine if “remedial measures” are appropriate.

Recent remarks by the Head of the DOJ’s Criminal Division and the DOJ’s new FCPA guidance provide greater clarity and foreshadow future enforcement priorities.

New FCPA Guidance

The DOJ has now issued new Guidance “to ensure that FCPA investigations and prosecutions are carried out in accordance with President Trump’s directive by (1) limiting undue burdens on American companies that operate abroad and (2) targeting enforcement actions against conduct that directly undermines U.S. national interests.”

The Guidance directs prosecutors to:

• Target individual wrongdoing rather than “attribute nonspecific malfeasance to corporate structures.”
• Accelerate investigation timelines, conducting and concluding investigations with maximum efficiency.
• Consider broader impacts throughout the investigation, including “potential disruption to lawful businesses and the impact on a company’s employees.”

The Guidance also sets forth certain criteria to aid prosecutors in determining whether to initiate or pursue FCPA matters, including the following key factors, which align with recent directives and revised corporate enforcement priorities announced by the DOJ (we discussed here and here).

• Total Elimination of Cartels and Transnational Criminal Organizations (TCOs)

The Guidance reinforces that a “primary consideration” for the DOJ in determining whether to proceed with an FCPA matter is the nexus between alleged misconduct and cartel and TCO activity. Specifically, the Guidance sets forth the following factors for prosecutors to weigh regarding the alleged misconduct: (1) whether the misconduct “is associated with the criminal operations of a Cartel or TCO”; (2) if the misconduct “utilizes money launderers or shell companies that engage in money laundering for Cartels or TCOs”; or (3) whether the misconduct “is linked to employees of state-owned entities or other foreign officials who have received bribes from Cartels or TCOs.”

• Safeguarding Fair Opportunities for U.S. Companies

The Guidance highlights “[e]conomic growth and expansion of U.S. business opportunities” as “critical to safeguarding U.S. national security and economic prosperity.” Going forward, prosecutors will evaluate whether the alleged corrupt activities caused harm to U.S. economic interests by considering whether the misconduct prevented U.S. entities from competing fairly or caused U.S. entities to suffer economic injury. Regarding the Foreign Extortion Prevention Act, prosecutors will consider whether demands by foreign officials for bribes directly harmed U.S. entities.

• Advancing U.S. National Security

According to the Guidance, FCPA enforcement will also be refocused to prioritize cases that directly impact U.S. national security interests. The Guidance states that U.S. security largely depends on maintaining competitive advantages in strategic sectors, such as critical minerals, deep-water ports, and key infrastructure. FCPA enforcement resources will now be directed to combat bribery schemes that involve foreign officials in sectors with direct national security implications.

• Prioritizing Investigations of Serious Misconduct

Notably, the Guidance also makes clear that FCPA enforcement will not target “routine business practices” or “de-minimis or low-dollar generally accepted business courtesies.” Instead, DOJ will focus on matters involving significant corruption “tied to particular individuals.” Key indicators referenced in the Guidance include substantial bribe payments, sophisticated means to obscure or hide corrupt transactions, fraudulent conduct to facilitate bribery activities, and obstruction of justice.

The Guidance cautions that the newly outlined factors are not exhaustive, and that the DOJ will continue to have prosecutorial discretion when determining, based on the totality of circumstances, whether to terminate or continue an FCPA matter. Prosecutors must also consider and weigh other applicable policies, factors, and guidance when determining whether to pursue and FCPA investigation or enforcement action.

Key Takeaways

• With the focus on TCO and cartels, look for increased enforcement in Latin America. Compliance programs must adapt to a new level of sustained scrutiny across a wide variety of businesses and industries.
• Look for increased enforcement by foreign regulators. “Conduct that does not implicate U.S. interests should be left to our foreign counterparts or appropriate regulators,” said the Head of the DOJ’s Criminal Division.
• Despite disbanding the Corporate Enforcement Unit in the National Security Division, investigations and enforcement that directly impact U.S. national security interests will be a priority. Whether U.S. Attorneys or Main Justice will take the lead remains uncertain. Further, how national security risks and criminal corporate enforcement may marry to impact compliance, beyond, for instance, the Bank Secrecy Act, money laundering, and export controls remains unclear.
• Despite the temporary pause, the FCPA is very much alive and well with new priorities, targets, and revised directives around the factors that prosecutors will consider when determining whether to pursue an FCPA investigation or enforcement matter.
• Whistleblowers are on the rise according to the Head of DOJ’s Criminal Division who cited to their “continued robust tips” since the DOJ issued significant revisions to its corporate enforcement policies. Given this increase, well-designed and adequately resourced compliance programs are vital for companies to flag and remediate potential misconduct as well as navigate difficult considerations around self-disclosure. Companies should continue to evaluate their compliance programs, ensuring that their programs are equipped to effectively address and mitigate especially those high impact areas of white collar crimes identified by the DOJ (here).

Womble Bond Dickinson (US) LLP’s White Collar Defense and Criminal Investigations team helps domestic and international clients navigate all manner of white collar, regulatory, corporate and congressional investigations. Our team includes a distinguished roster former federal prosecutors and U.S. Attorneys who served at the highest levels of the Department of Justice and at leading United States Attorneys’ Offices. Our team also includes Chambers ranked veteran defense attorneys, and alumni of the SEC’s Enforcement Division, the U.S. Senate, and House of Representatives.