The Foreign Corrupt Practices Act (FCPA) is a federal United States law aimed at preventing the bribery of foreign government officials in an effort to obtain or retain business. The FCPA also requires companies whose securities are listed in the U.S. to adhere to accounting provisions outlined under the Securities Exchange Act of 1934.
The FCPA was developed after a 1970s investigation by the U.S. Securities and Exchange Commission found that hundreds of U.S. companies made questionable or illegal payments totaling more than $300 million to foreign government officials, politicians and political parties. Since its enactment in 1977, the FCPA's anti-bribery provisions have applied to all U.S. persons and certain foreign issuers of securities. Under FCPA amendments enacted in 1998, the anti-bribery provisions were expanded to include foreign firms and persons who, either directly or by proxy, make corrupt payments within U.S. territory.
The FCPA covers publicly traded companies, their officers, directors, employees, stockholders and "agents," which can include consultants, distributors and partners. The SEC and the Department of Justice (DOJ) share responsibility for FCPA enforcement; the SEC pursues civil actions, while the DOJ pursues both civil and criminal cases.
The FCPA accounting provisions were designed to operate in tandem with the act's anti-bribery provisions. These provisions require U.S. corporations to maintain financial books and records that "accurately and fairly" reflect the corporation's business transactions, and to devise and maintain an adequate system of internal accounting controls.