The Foreign Corrupt Practices Act (FCPA) is a federal anti-corruption law that was introduced in 1977 by the United States of America to prevent American publicly traded companies from bribing foreign governments for business benefits. THE FCPA is jointly enforced by the Department of Justice (DOJ) that is responsible for criminal penalties, and the Securities Exchange Commission (SEC) that handles civil penalties. In February 2025, President Trump issued an executive order titled “Pausing Foreign Corrupt Practices Act Enforcement to Further American Economic and National Security,” that stopped any new FCPA investigations and enforcement for 180 days. The executive order also instructed the Attorney General to review ongoing and past FCPA investigations and resolutions, as well as disseminate guidelines on enforcement action within the 180 days.
But reduced external enforcement does not mean that companies can relax their internal governance practices. In fact, now is the time for American organizations with multinational operations to strengthen their internal governance and compliance practices to ensure transparent and ethical operations across the world.
Even before the President’s issued the Executive Order, the number of enforcement actions by the SEC and DOJ were on the decline.
This decline can be attributed to multiple reasons:
The question is, does the latest Presidential executive order on the FCPA mean that companies can relax their corporate governance programs?
The answer is a resounding no.
If organizations relax their self-governance strategies in response to the slowdown in FCPA enforcement, they run the risk of corrupt practices that will eventually draw attention from stakeholders, regulators, and law makers. Over the years, organizations have suffered severe consequences as a result of poor corporate governance.
Strong corporate self- governance is now more important than ever before. Here are the key principles of an effective self- governance framework:
Robust Ethics and Compliance Program – Organizations must establish clear and enforceable policies governing ethics and compliance. Policies must be easily accessible, periodically reviewed and updated, and consistently applied. Mandatory and regular training and awareness programs to reinforce policies and ethical culture is critical. Above all, instituting a culture of compliance and ethics requires leadership commitment and involvement.
Whistleblower Policies – A well-structured and robust whistleblower policy is a fundamental element of a strong corporate governance program as it can help quick detection and mitigation of risks. Employees and stakeholders must be empowered to report misconduct without fear of retaliation. Organizations must establish secure and anonymous channels where reports are handled by the compliance or ethics committee rather than line managers. There must be zero tolerance policies in place for retaliatory practices to protect whistleblowers, accompanied by quick and transparent investigations.
Third-Party Risk Management – As the corporate ecosystem grows to include more vendors and third parties, it is critical to effectively manage third party risks. Due diligence processes, risk assessments, contracts that include clauses on anti-corruption, anti-bribery, and ethics, and regular and ongoing monitoring and audits should be mandatorily included in the corporate governance strategy.
Technology and AI in Compliance – Technology, particularly, Artificial Intelligence can be a game changer when it comes to self-governance. AI and automation can drive significant improvements in internal risk monitoring, misconduct detection and help organizations enforce ethics policies. For example, AI can track patterns of unethical behavior, identify conflict of interest and possible policy violations quickly so that they can be addressed before they blow up into a scandal. Organizations can leverage AI to improve accountability and transparency in internal compliance efforts.
The Presidential Executive Order merely puts a 180 day hold on enforcements and calls for review. It does not repeal the law as only the US Congress has the power to do that. Neither does it apply to corporate conduct during the 180-day period. Regardless of what action the DOJ takes once the 180 days are over, the statute of limitations on anti-bribery provisions under the FCPA will be longer than President Trump’s term in office – Civil and criminal violations have a five- year statute of limitations and criminal violations of the books and records and internal controls provisions carry a six-year statute of limitations term. It is also entirely possible that post the review the FCPA will remain unchanged and DOJ will continue with enforcements as before.
Also, American organizations operating in international markets are subject to local anti-corruption laws like the UK’s Bribery Act, and the EU Anti-Corruption Laws in addition to the FCPA. And they are subject to other regulations such as anti-bribery rules imposed by the World Bank, and global ethics standards like the UN Global Compact, ISO 37001 (Anti-Bribery Management System), and Corporate Social Responsibility (CSR) initiatives. Violation of any of these regulations and standards carry equal risk of penalties and reputational damage.
So regardless of the immediate action taken by the DOJ in response to the executive order, it would be prudent for American organizations to not only focus on self-governance but also strengthen their compliance programs. If the FCPA were to resume in its complete form after the current administration completes their term in office, then they should not be caught unprepared. A strong and proactive compliance program coupled with a robust self-governance strategy will help secure investor trust, and drive operational resilience and long term sustainability.
The current slowdown in FCPA enforcement does not mean that there is a slowdown in risks facing corporate America. Corporate ethics, and anti-corruption measures remain high on the priority list of most stakeholders including customers. A comprehensive self- governance program can prove to be a competitive advantage as the demand for corporate accountability and ethical behavior continues to grow. Now is the time for American companies to focus on building a resilient self- governance and compliance framework not just because it’s a regulatory requirement, but because it is of significant strategic value for their growth and reputation.
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