FCPA / U.K. Anti-Bribery Compliance: What Businesses Need to Know

No organisations doing business in a foreign territory can afford to neglect anti-corruption laws. With the potential for enormous fines, as well as reputational and legal damages, compliance is essential.

The problem is, many organisations struggle to navigate these often-opaque laws, and even more struggle to achieve the necessary level of visibility across their organisations and supply chain.

In this article, we’re going to look at the specific challenges the Foreign Corruption Practises Act (FCPA) and other anti-bribery laws present to businesses, as well as what can be done to mitigate the risks.

But before that, we need to understand why anti-corruption laws are so important.

Understanding the problem

There are plenty of reasons bribery needs to be aggressively combated by nation states: it produces monopolies, increases wealth inequality, artificially inflates prices and creates instability within populations, causing citizens to feel resentful and disenfranchised.

When laws and regulations are not enforced, shadow economies thrive and public health and safety are compromised. Ultimately, the UN estimates that the annual cost of corruption is over $3 trillion globally, with over $1 trillion of bribes exchanged.[1]

Anti-bribery laws have historically been poorly enforced, but this is beginning to change; starting with the creation of the FCP in 1977, modern attempts to properly tackle corruption have been increasingly successful, with more and more countries updating their legislation to enable more robust defences.

What is the FCPA?

The FCPA is a U.S. statute making it illegal for any individual within, or acting on behalf of, an organisation to engage in bribery to further their business interests. This might mean anything from direct financial offers to ‘discreet’ bribes, such as tickets to a sports game.

Companies whose securities are listed in the U.S. must also meet certain accounting provisions, namely maintaining up-to-date books and records, and maintaining an adequate system of internal accounting controls.

Non-compliance can lead to fines of up to $5 million per violation, as well as up to 20 years’ jail time and delisting from stock exchanges. In recent years, enforcement of the FCPA has become increasingly effective; in 2020 alone, financial penalties totalling over $6 billion were brought against U.S. companies for non-compliance.[2]

Perhaps the most challenging aspect of the FCPA is this: it does not only concern employees of the organisation, but actually applies to subsidiaries and third-party suppliers. This means businesses have a legal obligation to undertake careful due diligence and ensure every organisation they associate with is compliant, too.

The thinking behind this is that organisations and individuals need to be held as responsible as possible, in order to properly incentivise due diligence and compliance. Without the risk of real, organisation-wide fallout, less is likely to be done to avoid bribery and other forms of corruption.

However, it does present organisations with a number of challenging obstacles leaving them at heightened risk of infringement.

The challenges of FCPA

1.   Disparate data sources

Many organisations, especially large organisations, have serious information problems. Their data is stored in siloed systems that are often interoperable or at least highly inefficient, spread across multiple countries with no real centralised visibility.

Most businesses acknowledge this as a problem from a technical perspective, that their data would be more valuable to them if it were easily accessible and ‘cleaner’. But with legislation like the FCPA, these data problems become active risks and potential legal liabilities.

To ensure compliance, companies need to be able to account for their actions across a number of dimensions, having access to clear records stating when and where they have business; with whom; for how long; and through what channels. But disparate data systems make this extremely challenging.

2.   Lack of flexibility

Many countries have their own specific legal requirements which impact liability within the FCPA standards. This means, for example, when operating in certain Middle Eastern nations, businesses are required to use a local agent or representative.

The upshot is businesses need to be highly flexible to ensure proper compliance across multiple territories. Too many organisations still rely on manual processes, which are both at risk of human-error and tend to be slow to respond.

Ultimately, this leaves leaders desperately trying to keep up with the requirements of FCPA and the like, rather than proactively protecting themselves by automating FCPA compliance procedures.

3.   Limited visibility

Without full visibility of the supply chain, businesses are perpetually at risk. There is simply no room for error when it comes to FCPA compliance, and full visibility is really the only way leaders can be fully confident.

However, most organisations’ supply chain visibility is as siloed and patchy as their data storage. Without a single trusted source, they are left with two problems: first, they are unable to protect against infractions. But second, they are also unable to move sufficiently quickly to mitigate harm if infractions do occur.

There is no single guarantee of compliance across all parties at all times, but proper real time visibility and monitoring helps manage the risk and ensure the proper measures are taken when necessary.

How Contingent Can Help

Contingent’s third-party compliance and supplier risk platform provides a comprehensive solution to the problems we’ve discussed.

We make onboarding easier and safer, with purpose built solutions to handle the various sanctions, AML, Anti-bribery and corruption, and Modern Slavery regulations from across the world. But we also provide proactive monitoring, to ensure you are aware risks arise and extra attention needs to be paid, and automation to save your employees time.

All of this, plus we act as a centralising platform to ensure you can access real time data on all of your suppliers, both big and small.


[1] https://news.un.org/en/story/2018/12/1027971

[2] https://fcpablog.com/2020/12/10/the-top-three-fcpa-stories-of-ahem-2020/


Expert Insights

Delivered straight to your inbox.

background graphics
background graphics
background graphics
background graphics
background graphics