What is the FCPA (Foreign Corrupt Practices Act)?
The FCPA is a United States federal law, enacted in 1977, prohibiting the bribery of foreign government officials and requiring issuers to maintain accurate books and records with adequate internal accounting controls. Its reach is deliberately broad, and non-US companies are regularly prosecuted under it.
What the FCPA prohibits
The anti-bribery provisions make it unlawful to offer, pay, promise, or authorise anything of value to a foreign official to obtain or retain business. Intent matters, but the prohibition covers payments made through intermediaries: engaging an agent who pays the bribe does not insulate the company.
Jurisdiction extends to US issuers and domestic concerns wherever they operate, and to foreign companies taking any act in furtherance of a corrupt payment within US territory. A dollar-denominated wire or an email routed through a US server has been sufficient in past enforcement actions.
The books and records provisions
The accounting provisions are what generate most enforcement activity, and they carry no bribery requirement at all. Issuers must keep books that accurately and fairly reflect transactions in reasonable detail, and maintain a system of internal accounting controls sufficient to provide reasonable assurance over transaction authorisation and recording.
In practice this means a company can face significant penalties for mischaracterised payments and inadequate controls even where no bribe is proven. Misclassified consulting fees, unsupported commissions, and vague expense descriptions are the recurring findings.
FCPA and Supervizor
The books and records requirement is a data quality problem before it is a legal one. Supervizor's compliance solution tests transaction accuracy and control effectiveness across the whole ledger. Teams use it to:
- Test 100% of payments against policy, approval limits and documentation requirements
- Identify mischaracterised or unsupported transactions, particularly consulting fees, commissions and third-party payments
- Evidence internal accounting controls with continuous, documented testing rather than annual certification