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Foreign Corrupt Practices Act: Why You Need to Create Internal Controls and Procedures

Offshore Account Update

Posted on November 30, 2018 |

It is said that an ounce of prevention is worth a pound of cure. And this is certainly true when it comes to making sure employees behave properly when it comes to your company’s overseas business interests.

Bribery of foreign officials, as you are likely aware, is against the law. But what the potential sanctions are for violating the U.S. government’s anti-bribery law – the Foreign Corrupt Practices Act -- might surprise you.

Severe Sanctions for FCPA Violations

Violating the FCPA’s anti-bribery provisions can result in both criminal and civil liability.

The FCPA violating company can be fined up to $2 million, and directors, officers, employees and agents can each receive fines of up to $100,000. Further, there is the possibility that individuals who bribe foreign officials could receive as many as five years in prison.

Violators can also be required to pay additional civil penalties.

What Constitutes an FCPA Violation?

The FCPA prohibits businesses or individuals from engaging in behaviors or practices with an official of a foreign government who has the power to provide any kind of advantage or favor to you or your business.

What this means, in general terms, is that payments of any kind to anyone who can either provide you with a competitive or monetary advantage, or curry favor with someone who is in a position to provide you with an economic advantage, is unlawful.

Giving anything perceived to be of value – whether it is in the form of currency or not -- to a foreign official who has the power or influence to do you favors could be a violation of the FCPA. A Boston international tax attorney can explain precisely which activities that apply to your business ventures could result in exposure.

How Can You Prevent FCPA Violations?

You should consider working with a Boston international tax attorney to create internal policies and procedures to deter anyone in your company from violating the anti-bribery provisions of the FCPA. The following steps should be considered:

  • First, it is recommended that all employees undergo training in what types of behaviors and business dealings are considered illegal under the law. There are many activities that, while considered just a normal part of doing business in other countries, are illegal under the FCPA. You need to make your employees aware of what is and is not allowed.
  • Second, it is important to establish a strict anti-bribery corporate policy. This should be disseminated to all stakeholders and employees and published as part of your company’s governance protocols.
  • Third, regular internal procedures that audit activities that are prone to FCPA violation should be established.
  • Finally, there should be a mechanism for employees to report any suspicious activities to senior management so issues can be handled internally or with the help of Boston international tax attorneys where appropriate.

Contact a Boston International Tax Attorney As Soon As Possible

Not only should tax counsel be contacted to assist with setting up anti-bribery internal procedures, but if facts that lead you to suspect a violation are uncovered, it is advisable to contact a lawyer right away.

To learn more, contact Boston international tax attorney Kevin Thorn on our website or by calling 617-692-2989.

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