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Want to Protect Your Company From FCPA Violations? Train Your People and Audit Your Operations

Offshore Account Update

Posted on November 30, 2018 |

Under the Foreign Corrupt Practices Act, U.S. individuals and businesses are prohibited from bribing foreign officials.

That seems clear enough. But the problem is things are often not what they seem. Unfortunately for unsuspecting companies, many violations of the FCPA are the result of ignorance of what could constitute a bribe under the law. Other violations occur because individuals in a company will do whatever they can to keep business humming, even if it violates the federal anti-bribery statute.

As a business owner you need to take responsibility for ensuring that everyone working in your company knows what constitutes a violation of the FCPA. Every director, officer, and employee should understand – in no uncertain terms – that your company does not tolerate illegal behavior of any kind.  

What is Your Potential Exposure Under the FCPA?

In broad terms, the FCPA prohibits U.S. businesses or individuals from doing anything that encourages someone in power in a foreign government to favor you and/or your company.

Of course, offering a blatant bribe to an official in order to win an offshore contract or export prohibited items would both be violations. And paying someone to move your paperwork to the front of a bureaucratic line seems like an obvious FCPA violation, but what if the fee was a document charge that people routinely pay? Would it make a difference if it were considered a tip to the government worker and also a payment that is routinely paid by everyone doing business in that country?

The answers to these questions are not simple. Speaking with a New Jersey international tax attorney to learn the FCPA potential land mines in your particular industry and business is worth the effort. Violating the law can result in huge fines – up to $2 million – and certain individuals involved could spend up to five years in prison.

Preventing FCPA Violations

The best course of action any company can take is adopting policies and procedures to prevent Foreign Corrupt Practices Act violations from occurring. A New Jersey international tax attorney can work with you to create a program that fits your company’s business operations and culture.

At a minimum, though, a good preventative protocol would contain elements of:

  • Employee training. Anyone in a position to put the company at risk needs to understand what a potential violation of the FCPA looks like and know how to avoid mistakes. Included in this training should be a confidential reporting protocol so employees feel free to alert management to any potential violations.
  • Internal reviews. It is a good idea to have either internal auditors or an outside firm review your operations for any FCPA violation red flags.
  • Corporate governance. A strong statement that puts all stakeholders on notice that your company complies with all U.S. laws, including the FCPA, is recommended.

Turn to New Jersey International Tax Attorney Kevin Thorn For Guidance

Thorn Law Group’s New Jersey international tax attorneys can provide the guidance your company needs to help keep your business compliant with the FCPA, as well as other federal and state finance and tax rules.

To learn more, call attorney Kevin Thorn 201-355-8202 or visit our website.

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