Published On: April 12, 2026
Category: FCPA
U.S. companies that operate internationally must comply with both U.S. law and the laws of the countries where they do business. One of the most important of these laws is the Foreign Corrupt Practices Act (“FCPA”).
To reduce risk, your employees, agents, and business partners must understand, and follow, FCPA requirements in all international transactions.
What Is the Foreign Corrupt Practices Act (FCPA)?
The Foreign Corrupt Practices Act (“FCPA”) prohibits U.S. companies and individuals from offering, paying, or authorizing anything of value to foreign officials for the purpose of gaining a business advantage.
This includes payments made to:
- Foreign government officials
- Political party officials
- Candidates for public office
The law applies when the intent is to:
- Influence an official act or decision
- Induce a violation of a lawful duty
- Secure improper advantage through government influence
- Obtain or retain business
Who Must Comply with the FCPA?
The FCPA applies broadly. It is not limited to U.S.-based corporations.
Covered parties include:
- Individual employees, officers, and directors
- Agents and representatives acting on behalf of a company
- Domestic and foreign subsidiaries
- Business partners and affiliated entities
Liability is not limited to direct actions. A company or individual may also be held responsible for:
- Authorizing improper payments
- Assisting in violations
- Conspiring to violate the law
Common Red Flags for FCPA Violations
Certain warning signs may indicate a higher risk of FCPA violations. These should be addressed immediately through due diligence and internal controls.
Common red flags:
- An intermediary refuses to certify FCPA compliance
- Required disclosures contain incomplete or inaccurate information
- Multiple or unnecessary third parties are involved in the same transaction
- A consultant claims close ties to a foreign government official
U.S. Anti-Boycott Laws and International Business Compliance
In addition to the FCPA, U.S. companies must comply with federal anti-boycott laws.
These laws were enacted in response to the Arab League boycott of Israel and are designed to prevent U.S. companies from participating in or supporting foreign boycotts not sanctioned by the United States.
What Do U.S. Anti-Boycott Laws Prohibit?
U.S. companies are prohibited from entering into agreements that:
- Require refusal to do business with or in Israel, or with blacklisted companies
- Discriminate based on race, religion, sex, national origin, or nationality
- Require disclosure of business relationships with Israel or blacklisted entities
- Request information about a person’s race, religion, sex, or national origin
Violations can result in significant civil and criminal penalties.
What the FCPA Means for Your Business Operations
For U.S. companies, the FCPA creates strict limits on how business can be conducted internationally.
You cannot offer, authorize, or tolerate payments or benefits to foreign officials in exchange for business advantages. This includes:
- Bribes or kickbacks
- “Grease” or facilitating payments
- Commissions or finder’s fees tied to improper influence
- Gifts or anything of value intended to affect a decision
FCPA Rules for Foreign Contracts and Government Deals
If your company is pursuing contracts with a foreign government or a government-owned entity, these restrictions apply at every stage of the transaction.
You cannot:
- Participate in any arrangement to bribe a foreign official
- Approve or ignore improper payments made on your behalf
- Structure deals to conceal unethical or unlawful conduct
Third-Party Liability Under the FCPA
Using a third-party intermediary, such as a consultant, agent, or representative, does not eliminate risk.
Your company may still be held liable if a third party:
- Makes improper payments to a foreign official
- Acts with your knowledge or authorization
- Engages in misconduct that you failed to prevent through reasonable oversight
In practice, this means you must conduct due diligence and maintain control over all third parties involved in international business activities.
Common FCPA Compliance Questions for U.S. Businesses
Can We Use Consultants or Agents to Win Foreign Government Contracts?
Yes. U.S. companies may use consultants, independent contractors, or local agents to help secure business in foreign markets. These individuals often provide valuable services, such as local market knowledge, insight into government processes, and assistance with business development.
However, using a consultant is only permissible if the relationship is legitimate. You cannot pay a consultant if you know, or reasonably should know, that the funds will be used as a bribe. You also cannot ignore warning signs of improper conduct or rely on a third party to indirectly violate the law on your behalf.
Using a third party does not shield your company from liability. If a consultant pays a bribe in connection with your business, your company may still be held responsible.
What Requirements Must a Consultant Meet?
A consultant must provide legitimate services and be compensated at a reasonable, market-based rate. The relationship should be transparent and supported by proper documentation. In addition, the consultant must agree in writing to comply with the Foreign Corrupt Practices Act and must not engage in any improper conduct when acting on behalf of your company.
A written agreement is essential, but it does not eliminate liability if you are aware of misconduct or fail to take appropriate steps to prevent it.
How Do We Vet a Foreign Consultant or Agent?
Before hiring a consultant or intermediary, you must conduct appropriate due diligence. This begins with checking the individual or company against U.S. government restricted party lists, including those maintained by the Department of Commerce. If the person or entity appears on any restricted list, you cannot engage them. This review should also include any owners or business partners associated with the consultant.
You should also evaluate whether the consultant operates a legitimate business. Indicators of legitimacy include an established presence in the country, a verifiable track record, and transparency regarding ownership and operations.
Finally, you must enter into a written agreement that clearly defines the services to be provided and includes provisions requiring compliance with the FCPA. While this type of contract is important, it does not fully protect you if improper conduct occurs.
What Red Flags Should We Watch For?
Certain warning signs may indicate an increased risk of improper conduct. These include requests for payment to an unrelated third party, demands for cash payments, unusually large commissions that do not align with the services provided, and requests for reimbursement or expenses that are vague or poorly documented.
If any of these issues arise, they should be investigated before proceeding with the relationship.
Can We Pay Finder’s Fees to Foreign Agents?
Yes, finder’s fees may be paid to foreign agents who help identify business opportunities, provided the arrangement is legitimate. The agent must be properly vetted, the compensation must be reasonable, and the relationship must be documented in a written agreement. The agent must also agree to comply with the FCPA and refrain from making improper payments.
As with any third party, your company remains responsible for the agent’s conduct.
Are “Facilitating Payments” Ever Allowed Under the FCPA?
In limited circumstances, the FCPA allows facilitating payments for routine governmental actions. These are actions that a government official is already obligated to perform, such as issuing permits, processing visas, providing basic services, or scheduling inspections.
However, this exception is narrow. The payment must not be made to influence a decision to award or retain business, and it must not involve discretionary actions. If there us any uncertainty about whether a payment qualifies under this exception, you should consult legal counsel before proceeding.
What Are the Penalties for FCPA Violations?
FCPA violations can result in significant criminal and civil penalties. Companies may face criminal fines of up to $2,000,000, while individuals may face fines of up to $100,000 and imprisonment for up to five years. Individuals are responsible for paying their own fines and cannot be reimbursed by their employer.
Civil penalties may also apply, including fines ranging from $5,000 to $100,000 for individuals and $50,000 to $500,000 for companies. In some cases, companies may be required to disgorg profits and may be barred from doing business with the federal government.
Who Qualifies as a “Foreign Government Official?”
The term “foreign government official” is defined broadly under the FCPA. It includes employees and representatives of foreign governments, as well as individuals working for government agencies, departments, or public international organizations.
This definition can extend to employees of government-owned or controlled businesses, such as utilities or telecommunications companies. It may include individuals at all levels, from high-ranking officials to customs officers or local employees. You should not assume that someone is not a government official without conducting appropriate due diligence.
Can We Make Political Contributions to Foreign Officials?
Political contributions may be permissible in limited circumstances, such as when the candidate has no influence over your company’s business activities. However, contributions are prohibited if they are intended to influence official action or to obtain a business advantage.
A contribution made as part of a quid pro quo arrangement, or in place of a direct payment to an official, may violate the FCPA regardless of how the payment is structured. Indirect contributions can still create liability if they are tied to improper intent.
What If We Did Not Know About an Improper Payment?
A lack of direct knowledge does not necessarily protect you from liability. You may still be found in violation of the FCPA if you had actual knowledge of the misconduct or if you consciously disregarded clear warning signs.
This concept, often referred to as “willful blindness,” means that you cannot avoid liability by ignoring suspicious circumstances. If you suspect improper activity, you are expected to investigate and take appropriate action.
Can We Pay Travel Expenses for Foreign Officials?
As a general rule, paying travel expenses for foreign officials is not permitted. Limited exceptions may apply if the expenses are directly related to a legitimate contractual obligation, such as required training under an existing agreement.
However, payments for travel related to marketing, business development, or other non-essential purposes should be avoided. Covering expenses for family members or providing benefits without a clear business justification may be viewed as an attempt to influence an official and may constitute a violation of the FCPA.
Stay Compliant. Protect Your Business.
If your company operates internationally, compliance is not optional. Proactive steps can reduce risk and help you avoid costly violations.
Lantz Law Group advises businesses on FCPA and Anti-boycott compliance, including risk assessment, internal controls, and policy development. We can help you identify potential issues and address them before they become enforcement problems.
Contact us to discuss your company’s compliance strategy.