In early February 2025, the compliance industry was stunned when a Presidential Executive Order was signed by President Trump, pausing the enforcement of the Foreign Corrupt Practices Act (FCPA) and ordering the Attorney General to “review guidelines and policies governing investigations and enforcement actions under the FCPA”. While the initial period is set out for six months, it may be extended for another six months.

Despite the fate of the FCPA being unknown, what if, ‘just for kicks’, we imagine that major adjustments are coming?

Would this really result in significant changes in the global compliance landscape?

Nearly every country in the world has some form of anti-corruption law. Arguably, the enforcement is where they can largely differ. What makes a law like the FCPA different to many other anti-corruption laws, is its extraterritoriality. By their very nature, extraterritorial laws apply beyond the borders of the jurisdiction that enacted it. Although some connection to the country in question has to be there, some laws have a very broad definition and therefore application. While the cat may seemingly be away and it is tempting for the mice to play, the neighbour’s cat is already waiting in the wings and may be ready to pounce.

The FCPA is not the only anti-corruption law with an extraterritorial reach. The UK Bribery Act (2010) has a very wide reach and can be applied to any company or person with a connection to the United Kingdom. In fact, in quite a few aspects, the Bribery Act has stricter provisions than the FCPA. While the FCPA only targets bribery of foreign officials, the UK Act takes bribery in the private sector (B2B if you will) into account. While the FCPA allows for facilitation payments, the UK Act does not.

Could the UK Bribery Act Step Up?

Maybe the reason why the UK Act has been sort of handled like the stepsister of the FCPA, despite being stricter and more far-reaching in some ways, is the lack of enforcement. Be it because it is a relatively young act or because the burden of proof required for prosecution being extremely high, we have not yet seen many prosecutions and the few cases that we have seen have been largely settled through deferred prosecution agreements.

The vacuum created by the FCPA enforcement being ‘out of order’ may give the UK Act more room to come into its own and it could result in us seeing more enforcement coming from the Bribery Act.

The Rise of ESG and Due Diligence Regulations

Besides the UK Act, we saw another kid entering the playground last year with the enactment of the Corporate Sustainability Due Diligence Directive (CSDDD) by the European Union (EU). Although there is still a tug-of-war about the parameters which may impact which and how many companies will have to comply with the law, the CSDDD will apply to all non-EU companies of qualifying size that market their products within the EU.

Mind you, the CSDDD focusses on human rights and environmental impacts in companies’ supply chains, rather than corruption explicitly. However, according to the Directive: “Adverse human rights and environmental impacts can be intertwined with or underpinned by factors such as corruption and bribery. It may therefore be necessary for companies to take into account those factors when carrying out human rights and environmental due diligence, in a manner that is consistent with the UN Convention against Corruption.”

Human rights abuses and environmental transgressions thrive in environments with weak controls, often facilitated by corruption and a case of you can’t have one without the other.

Governance: The ‘G’ in ESG and Why It Matters

Similar to the CSDDD, more and more countries are enacting legislation requiring businesses to conduct business responsibly and adhere to ESG standards. Most have a heavy focus on the environmental and social aspects but guess what is hiding in the G for governance? You guessed it, corruption. Therefore, even though legislation like CSDDD or similar may not have specific anti-corruption provisions, in order to comply with them, it will pay off for companies to follow good anti-corruption practices.

Quite a number of companies that built their compliance programmes based on the FCPA only may still fall under the UK Act, CSDD or other upcoming legislation. So, whether or not we will see significant changes in the enforcement of the FCPA or not, businesses are well advised to not shake up their existing structures too much.

The Cost vs. Benefit Debate in Compliance

But all of this is just looking at it from a compliance angle. And much like security, compliance is usually seen as solely a cost factor rather than positively contributing to the bottom line of a company. Therefore, it is maybe no surprise that one of the reasons given in the Presidential Executive Order for the pausing of the FCPA, is the effect the anti-corruption legislation has on companies’ competitive advantage because it inhibits them from following “routine business practices in other nations”.

In light of the FCPA already not accounting for private bribes as well as allowing for facilitation payments, which refer to an unofficial payment made in order to expedite a routine government action, one could probably argue that the pausing of the FCPA is then sanctioning the payment of bribes. But that is a discussion for another day…

Long-Term Consequences: Is This Really a Win?

Even if we entertain the thought that paying a bribe may lead to some short-term business advantage or success, widespread corruption breeds conditions that lead to social and political unrest and weakens states.

Ultimately, allowing a breeding ground for further ESG issues to flourish, thus making it a more challenging environment to operate in over time. Further, there are studies suggesting that companies having robust ESG frameworks in place, tend to be more resilient and can withstand geopolitical crises better than companies without such frameworks. We currently live in a world where geopolitical crises seemingly have become the rule rather than exception.

Let’s follow that train of thought: Anti-corruption compliance makes ESG frameworks stronger. Strong ESG frameworks lead to more resilient companies that can navigate geopolitical challenges better. Companies that are more resilient, are better positioned to capitalise on market opportunities or pivot during crises, therefore making a direct positive contribution to a company’s competitive advantage. And with that the bottom line…

Some might consider the pausing of the FCPA a positive, but based on the above, it is more a case of instant gratification where we forego a future benefit in order to obtain a less rewarding but more immediate benefit.

Final Thoughts: Why Companies Should Stay the Course

In a nutshell: While the jury is still out on the ultimate fate of the FCPA, companies should not sacrifice their compliance structures quite yet but rather use it to examine their frameworks and stress test them against other legislation that may apply to them, all the while using it to their advantage and positively contributing to their bottom line.

Disclaimer: The contents of this article are for informational purposes only and do not constitute legal advice, a legal opinion, or an exhaustive analysis of the Foreign Corrupt Practices Act (FCPA) or any other anti-corruption legislation. The views expressed are those of the author and do not reflect any formal legal position on whether FCPA enforcement should be modified. Readers should consult qualified legal professionals for specific advice regarding compliance and regulatory matters.

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