Compliance Blog

Record Fine in FCPA Case Underscores Need for Compliance Training

December 14, 2020 | Sarah Way

Anti-Bribery Training

Whether an organization has 30 employees or 30,000, bribery and corruption can occur on a large or small scale and in a wide range of situations. On the large-scale side, a recent case offers some lessons in the importance of anti-bribery and anti-corruption training as part of a comprehensive compliance program.

In a nutshell:

The US Securities and Exchange Commission (SEC) recently issued its largest fine to date — about $3 billion — against a New York bank for bribery charges under the Foreign Corrupt Practices Act (FCPA). The record-setting fine was based on $1.6 billion in bribes the bank’s senior employees made through third-party intermediaries to high-ranking government officials across several countries.

In its press release, the DOJ said that bank employees working in control functions knew that transactions involving a foreign financier posed a significant risk, but they did not take reasonable steps to ensure that he wasn’t involved. The bank further admitted that “there were significant red flags raised during and after the due diligence process that were either ignored or only nominally addressed” by bank personnel so that the transactions would be approved. 

In announcing the charges, the SEC said, “Corruption risks can be posed by those at all levels of a company, including in the senior ranks. This case demonstrates how important it is for companies to have controls that are tailored to the risks presented by persons employed at all levels.”

FCPA, Anti-Bribery and Anti-Corruption Training

Providing regular anti-bribery training to employees, third parties and partners is one of the concrete steps organizations can take to raise awareness of the FCPA and similar laws in other countries, and reduce the risks of bribery and corruption in the workplace.

Employees should know:

What is the FCPA?

The Foreign Corrupt Practices Act is a federal law that makes it illegal to bribe foreign government officials to obtain or retain business or direct business to another person. The law also prohibits making payments to third parties knowing that some or all of the payments will be used to bribe a foreign government official. The FCPA applies not only to US citizens and companies, but also to foreign businesses listed on the US stock exchanges and those conducting business from within the US.

In addition to prohibiting bribery, the FCPA’s books and records provisions require that organizations maintain honest, accurate, and detailed records of all assets, accounts and financial transactions. The FCPA also requires implementing an internal system of controls to prevent and detect incidents of bribery, corruption and fraud.

As recent settlements show, the SEC and DOJ are very aggressive about enforcing federal bribery laws.

Who qualifies as a public official?

Identifying who is and isn’t a public official is not always easy – it’s a broad category. Besides government officials, anti-bribery laws apply to virtually any government worker or anyone working for an international agency, such as the United Nations, Red Cross, or the World Bank.

What is a bribe?

This is one of the gray areas that FCPA/anti-corruption training can clarify. When individuals know what constitutes “anything of value” (both tangible and intangible), understand why individuals and organizations engage in bribery, and can differentiate between appropriate and inappropriate business gifts they are more likely to avoid even the appearance of improper behavior that can lead to FCPA violations.

How to report bribery and corruption

Training offers a flexible communication channel to explain and reinforce an organization’s anti-bribery and anti-corruption policies (including gifts, travel and entertainment policies) and procedures for reporting bribery and other unethical conduct.

Traliant Insight

Given the steep penalties and fines involved with FCPA violations, organizations should ensure they have up-to-date anti-bribery/anti-corruption policies, internal systems and controls and training in place to educate employees, partners and third parties. A knowledgeable workforce that can recognize signs of misconduct can go a long way toward preventing bribery and corruption in the workplace.

Sign up for a free trial of our Anti-Bribery and Anti-Corruption Training course: