FCPA Enforcement on Pause Per Executive Order

Just over two months ago, the Kansas City Chiefs were still two-time defending Super Bowl champions, Luka Doncic was a Dallas Maverick, and the U.S. Department of Justice's (DOJ) Foreign Corrupt Practices Act (FCPA) Unit was lauded as the "Department's foremost experts in corporate enforcement, compliance, and policy" that had unraveled "the most complex corporate corruption and fraud schemes that reach across the Globe." Indeed, as late as Dec. 5, 2024, the DOJ applauded its FCPA enforcement unit whose prosecutions had resulted in billions of dollars in fines and penalties sent back to U.S. coffers.

The DOJ reiterated that 2024 was a "Banner Year" for FCPA enforcement.

Times Have Changed

The Trump Administration has issued a sweeping, game-changing view on enforcement of the FCPA. On Feb. 10, 2025, the administration made clear via an executive order (EO) that future enforcement of the FCPA is "on pause." In the EO, President Donald Trump signaled that pausing enforcement of the FCPA will further American economic and national security. In the administration's view, "American national security depends on America and its companies gaining strategic commercial advantages around the world, and President Trump is stopping excessive, unpredictable FCPA enforcement that makes American companies less competitive." As President Trump has signaled in the past, he believes that the FCPA hinders business deals, as American executives are afraid to make phone calls or pursue deals that can lead to FCPA exposure and even criminal penalties. The EO reiterates the administration's view that "U.S. companies are harmed by FCPA overenforcement because they are prohibited from engaging in practices common among international competitors, creating an uneven playing field."

U.S. Attorney General Memo on Feb. 5, 2025

The first major signal in weakening FCPA enforcement was announced by U.S. Attorney General (AG) Pam Bondi in a Feb. 5, 2025, memorandum issued to the entire DOJ. In that memo, along with prioritizing to eliminate drug cartels and transnational criminal organizations (TCOs), AG Bondi wrote that the DOJ "shall prioritize investigations related to foreign bribery that facilitates the criminal operations of Cartels and TCOs, and shift focus away from investigations that do not involve such a connection" (emphasis added). The change in focus was clear: Foreign bribery with a nexus to the U.S. would continue to be investigated, particularly where it has a tie to drugs, money laundering, firearms and human trafficking. Foreign bribery that does not have such a nexus – for example, bribing a foreign official to procure a multimillion-dollar energy contract or bribing a foreign official to maintain a lucrative airport concession – will receive fewer resources and less attention.

Executive Order on Feb. 10, 2025

Only five days later, the Trump Administration further refined its position on FCPA enforcement. Though the Feb. 5, 2025, memorandum still leaves room for FCPA enforcement – particularly where it relates to narcotics trafficking, firearms, human trafficking and national security – the latest guidance from the EO puts FCPA enforcement on hold.

The EO on Feb. 10, 2025, directs the AG to 1) cease initiation of any new FCPA investigations or enforcement actions unless the AG determines that an exception should be made, 2) review "in detail" all existing FCPA investigations or enforcement actions and "take appropriate action with respect to such matters to restore proper bounds on FCPA enforcement and preserve Presidential foreign policy objectives" and 3) issue updated guidelines or policies "to adequately promote the President's authority to conduct foreign affairs and prioritize American interests," competitiveness and efficient use of federal law enforcement resources.

Importantly, the EO does not rewrite or eliminate the FCPA, which can only be done by the U.S. Congress. But it signals that the Trump Administration does not want the DOJ – for the next 180 days or longer if the AG so decides – to enforce the statute until the department can create new guidelines to be issued to its prosecutors. Thereafter, enforcement actions may resume only when "specifically authorized by the Attorney General."

Guidance on the FCPA

The FCPA was first enacted in 1977 to combat foreign corruption. In general, the law prohibits both U.S. and foreign companies from paying bribes or anything of value to foreign officials to obtain a benefit, procure a contract or retain business. Although the FCPA's enforcement was dormant for many years, investigations and settlements skyrocketed during the George W. Bush and Obama Administrations, resulting in hundreds of millions of dollars in fines from offending companies.

As stated above, the EO makes clear that enforcement of the FCPA is now seen as a threat to American economic and national security, as it is thought to inhibit U.S. companies from competing for business abroad.

The ramifications in this policy shift are significant and instant. FCPA investigations and enforcement actions are now on pause for six months or perhaps longer. This being said, companies and their counsel – and others subject to its jurisdiction – should remember that the FCPA remains a lawful statute that imposes enormous civil and criminal penalties. Further, while the FCPA's enforcement presently is paused, it is unclear what guidance will be issued months down the road. Other bribery statutes exist, such as the Foreign Extortion Prevention Act (FEPA), and it remains unclear how foreign governments will react. Many such governments also have anti-bribery laws at their disposal. Thus, wise corporate counsel should continue to employ robust compliance measures, and eliminating such measures at this juncture would be premature.