United States: U.S. Congress Passes Foreign Extortion Prevention Act Imposing Liability On Foreign Officials Who Receive Or Demand Bribes From U.S. Persons Or Any Person While In The U.S.

Key Takeaways:

• Congress passed the Foreign Extortion Prevent Act ("FEPA"), as part of the National Defense Authorization Act ("NDAA") for Fiscal Year 2024.
• FEPA imposes liability on foreign officials, or persons selected to be foreign officials, who demand, seek, receive, or accept bribes from U.S. companies or individuals, or from any person while in the United States.
• U.S. businesses, foreign governments, state-owned entities, and foreign officials should prepare for FEPA enforcement by developing or enhancing their compliance programs and instituting anti-corruption trainings.

The U.S. Congress has passed the Foreign Extortion Prevention Act ("FEPA"), as part of the National Defense Authorization Act for Fiscal Year 2024 ("NDAA"). On December 14, 2023, the measure was sent to President Biden, who will soon sign it into law.

FEPA imposes liability on foreign officials, or those selected to be foreign officials, who demand, seek, receive, or accept bribes from U.S. companies or individuals, or from any person while in the territory of the United States. By targeting the demand side of bribery, FEPA serves as a complement to the Foreign Corrupt Practices Act ("FCPA"), which targets individuals and companies that pay bribes to foreign government officials.

The Biden administration has previously indicated that targeting the demand side of bribery is a priority and part of the administration's strategy for combating global corruption. In addition, for the past several years, the Department of Justice ("DOJ") has been bringing enforcement actions against foreign government officials who obtained bribes from U.S. persons based on other federal laws, particularly under the federal money laundering statute (18 U.S.C. § 1956). FEPA creates a targeted legal regime for the DOJ to investigate and prosecute foreign officials that seek or obtain bribes from U.S. companies.

Below we provide an overview of FEPA and its implications for U.S. businesses and foreign government agencies and state-owned entities that do business with U.S. companies.

Noteworthy Aspects of FEPA

FEPA amends the domestic bribery statute, 18 U.S.C. § 201, by adding "foreign officials" to the class of persons covered by the statute. The term is defined to include:

• Any official or employee of a foreign government or any department, agency, or instrumentality, or any "senior foreign political figure" (defined in 31 C.F.R. § 1010.605);
• Any official or employee of a public international organization; and
• Any person acting in an official or unofficial capacity for or on behalf of a government, department, agency, or instrumentality, or a public international organization.

FEPA's definition of "foreign official" is similar to the definition of the term under the FCPA, though there are some key differences. For example, the FCPA only covers individuals acting in an official capacity for, or on behalf of, a government, department, agency, or instrumentality, or a public international organization, but FEPA also covers individuals acting in an "unofficial capacity" for such agencies or entities. Unlike the FCPA, FEPA does not apply to candidates for political office, though it applies to certain senior foreign political figures, including senior officials of a major foreign political party.

FEPA makes it "unlawful for any foreign official or person selected to be a foreign official to corruptly demand, seek, receive, or accept, or agree to receive or accept"—either directly or indirectly—something of value in exchange for any of the following:

• "[B]eing influenced in the performance of any official act."
• "[B]eing induced to do or omit to do any act in violation of the official duty of such foreign official or person."
• "[C]onferring any improper advantage, in connection with obtaining or retaining business for or with, or directing business to, any person."

FEPA applies when a foreign official demands, seeks, receives, or accepts a bribe—"personally or for any other person or nongovernmental entity by" using "any means or instrumentality of interstate commerce"—from:

1. Any person while in the territory of the United States;
2. Any "domestic concerns," i.e., any U.S. citizens or residents, or any entities with a principal place of business in the U.S., or which are organized under the laws of the U.S.; or
3. An "issuer" as that term is defined in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)).

Those found liable under FEPA could face a fine of up to $250,000 or three times the monetary equivalent of the bribe, and a prison sentence of up to 15 years.

Current Legal Landscape

In the past few years, the U.S. has brought several enforcement actions against former government officials involved in bribery schemes through existing federal laws, including the federal money laundering statute. The United States has also used U.S. sanctions to penalize foreign officials engaged in corruption, including for example, through the Global Magnitsky Sanctions program, which allows the U.S. Department of Treasury to sanction persons determined, among other things, to have directly or indirectly engaged in certain corrupt acts anywhere in the world.

Thus, the U.S. has already been focused on penalizing the demand side of foreign commercial bribery. FEPA provides the U.S. with another, more targeted, tool to address such wrongdoing.

Enforcement Considerations

As can be seen from FCPA enforcement actions brought in the last few years, anti-corruption enforcement has become increasingly globalized, with law enforcement agencies cooperating on an international scale leading to substantial corporate resolutions. President Biden's 2021 Strategy on Combatting Corruption highlights that the "the U.S. Government is committed to working with allies and partners on enacting legislation criminalizing the demand side of bribery, and enforcing new and existing laws, including in the countries where the bribery occurs." We expect this trend to continue now that FEPA will be enacted into law, especially given the foreign policy and international relations implications of prosecuting foreign government officials.

Next Steps

FEPA's passage by the U.S. Congress, coupled with the enforcement actions DOJ has brought, and the U.S. sanctions imposed, against foreign officials involved in bribery in the past few years, signal that anti-corruption enforcement continues to be a priority for the United States. U.S. businesses engaged in business abroad and foreign government officials, including foreign state-owned entities and their officials, should be aware of FEPA and prepare for its enforcement by implementing or strengthening their anti-corruption compliance programs including through organizing anti-corruption trainings.

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