Executive Order pauses new FCPA enforcement, initiates enforcement review, and directs preparation of new guidance

A new Executive Order directs the DOJ to halt new investigations and enforcement actions under the Foreign Corrupt Practices Act (FCPA) for 180 days. This pause, intended to alleviate perceived burdens on U.S. businesses, raises significant considerations for non-U.S. companies. Notably, foreign entities have historically comprised a substantial portion of FCPA enforcement actions. 

The Executive Order

On February 10, 2025, President Donald Trump signed an Executive Order titled “Pausing Foreign Corrupt Practices Act Enforcement to Further American Economic and National Security,” directing the Department of Justice (DOJ) to halt new investigations and enforcement actions under the Foreign Corrupt Practices Act of 1977 (FCPA). The order mandates a 180-day pause, extendable at the Attorney General’s discretion, during which the DOJ is to review current enforcement practices and issue revised guidelines. The Executive Order criticizes the FCPA’s enforcement as “overexpansive and unpredictable,” asserting that it impedes U.S. foreign policy objectives and places American businesses at a disadvantage in international markets. 

While this pause applies broadly, a critical exception allows the Attorney General to pursue individual cases deemed necessary, which introduces a powerful tool for selective targeting of foreign companies. This provision leaves major uncertainty for non-U.S. companies operating under U.S. jurisdiction or conducting business with U.S.-linked entities.

Implications for non-U.S. companies

While the Executive Order emphasizes alleviating burdens on American businesses, its impact on non-U.S. companies requires careful consideration, as approx. 41% of defendants in FCPA actions were foreign companies (Foreign Corrupt Practices Act: Statistics & Analytics):

1. Potential shift in enforcement focus:
   The Executive Order is protectionist toward U.S. companies, raising questions about whether enforcement efforts might pivot toward non-U.S. entities to level the playing field. Such a shift could lead to increased scrutiny of foreign companies subject to the FCPA. 

2. Continued enforcement by other agencies: 
   The Executive Order directs the DOJ to pause FCPA enforcement but does not explicitly address the Securities and Exchange Commission (SEC), which shares enforcement authority. Non-U.S. companies, especially issuers in U.S. markets, should remain vigilant, as the SEC may continue its FCPA enforcement activities independently. 

Key considerations for non-U.S. companies

• Maintain robust compliance programs: Despite potential shifts in U.S. enforcement priorities, non-U.S. companies should continue to uphold strong anti-corruption policies and procedures to mitigate risks across various jurisdictions.
• Monitor regulatory developments: Stay informed about changes in U.S. enforcement policies and international anti-corruption frameworks to assess and adjust compliance strategies accordingly.
• Evaluate cross-jurisdictional risks: Consider the implications of the Executive Order within the broader context of global anti-corruption enforcement to ensure comprehensive risk management.
• Consider geopolitical risk in business decisions: Assess the broader geopolitical landscape and its potential impact on business judgement decisions. Incorporate these risks into strategic decision-making to avoid becoming collateral in geopolitical disputes or trade tensions.

In conclusion, while the Executive Order aims to reduce enforcement burdens on U.S. companies, non-U.S. entities must remain attentive to the evolving enforcement landscape and maintain rigorous compliance measures to navigate potential challenges effectively.