Trump freezes FCPA. Why it matters for AML sanctions screening

Trump Freezes FCPA Enforcement: What It Means for Global Compliance

The recent executive order suspending enforcement of the Foreign Corrupt Practices Act (FCPA) has ignited a debate over business ethics, regulatory burdens, and global competition.

For decades, the FCPA has been a cornerstone of U.S. anti-bribery enforcement, preventing companies from using corrupt payments to secure international business deals. Now, with enforcement paused, companies must weigh the risks and opportunities, particularly in relation to sanctions compliance and anti-money laundering (AML) regulations, which remain in full effect.

What Is the FCPA and Why Was It Important?

The Foreign Corrupt Practices Act of 1977 (FCPA), codified at 15 U.S.C. §§ 78dd-1, et seq., was enacted to prevent U.S. companies and individuals from engaging in bribery of foreign officials. The law has two primary components:

1. Anti-Bribery Provisions – Prohibit U.S. persons, businesses, and certain foreign entities from offering, promising, or paying money (or anything of value) to foreign officials to influence decisions or gain an unfair business advantage.
2. Accounting Provisions – Require publicly traded companies to maintain accurate books and records and implement internal accounting controls to prevent fraudulent transactions.

In 1998, the FCPA was expanded to cover foreign firms and individuals if they commit bribery within U.S. territory or use U.S. financial systems to facilitate corrupt payments.

The FCPA was one of the world’s first anti-bribery laws, and its enforcement set a global standard for corporate accountability. Over the years, billions of dollars in fines have been imposed on multinational corporations, and executives have faced prison time for violations.

Some notable FCPA cases include:

• Siemens AG ($800 million settlement for bribery in multiple countries)
• Goldman Sachs ($2.9 billion settlement for 1MDB corruption)
• Glencore ($1.1 billion fine for bribery and market manipulation)

With the FCPA now frozen, businesses may find it easier to close deals, but they remain exposed to other regulatory risks—especially those related to OFAC sanctions and AML laws.

Why OFAC and AML Screening Still Matter

While FCPA enforcement is paused, sanctions laws and AML compliance remain fully in effect. The Office of Foreign Assets Control (OFAC), the Financial Crimes Enforcement Network (FinCEN), and international regulatory bodies continue to monitor and penalize illicit financial activity.

Key Risks to Consider

1. Global Magnitsky Act (GLOMAG) – OFAC can still sanction individuals engaged in significant corruption or human rights abuses, regardless of FCPA enforcement.
2. SDN List – Individuals like Dan Gertler, who was sanctioned for bribery in the Democratic Republic of the Congo (DRC), remain on OFAC’s Specially Designated Nationals (SDN) list.
3. AML Compliance Regulations – Financial institutions must still file Suspicious Activity Reports (SARs) and conduct enhanced due diligence on high-risk customers, including Politically Exposed Persons (PEPs).
4. International Bribery Laws Still Apply – The UK Bribery Act and EU AML Directives remain in force, and violations could trigger severe cross-border investigations.

The Foreign Extortion Prevention Act (FEPA): Closing the Loophole

In July 2024, the Foreign Extortion Prevention Act (FEPA) was enacted to criminalize the "demand side" of foreign bribery. While the FCPA focuses on U.S. companies paying bribes, FEPA targets foreign officials who demand or accept bribes.

Key Provisions of FEPA:

• Who It Applies To: FEPA applies to foreign officials or those selected to become foreign officials who demand, seek, or accept bribes from U.S. businesses or individuals.
• Penalties: A violation of FEPA can result in up to 15 years in prison and fines up to $250,000 or three times the bribe amount (18 U.S.C. § 1352).
• Key Difference from the FCPA: Unlike the FCPA, which targets the giver of the bribe, FEPA holds the receiver accountable.

While the FCPA is frozen, FEPA remains active, meaning U.S. businesses can still cooperate with enforcement agencies to report bribery schemes.

Practical Implications for Businesses

• Maintain Strong Compliance Programs – The FCPA freeze may reduce immediate legal risks, but businesses should still uphold internal controls and ethical practices to avoid future liability.
• OFAC Screening Is More Important Than Ever – Without FCPA enforcement, U.S. authorities may increase sanctions designations for individuals involved in corruption. Automated compliance tools remain crucial for screening customers and partners against global watchlists.
• International Anti-Bribery Enforcement Will Continue – The OECD, EU, and UK regulators are likely to increase oversight of bribery cases involving multinational companies.

Conclusion: What’s Next?

The FCPA freeze represents a major shift in U.S. regulatory policy, but companies should not assume that bribery is now "risk-free." OFAC, AML laws, and FEPA remain in force, and non-U.S. regulators will likely step up enforcement.

To stay compliant, businesses should continue robust sanctions screening, AML monitoring, and ethical due diligence. The global financial landscape is evolving, but transparency and accountability will always be a competitive advantage.

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