The Foreign Corrupt Practices Act attempts to reduce the possibility that a corporation with American affiliations will engage in the bribery of foreign officials.

The act was created in 1977 and has since been amended and expanded several times. The SEC and the Department of Justice are both responsible for enforcing the FCPA, which is a law designed to prevent US-based companies from engaging in corrupt practices abroad.

American companies with operations or acquisitions targets abroad will find that their auditing, reporting, and oversight is heightened due to this law. There is a long list of historical examples of bribes to foreign officials that resulted in economic gains for corporations, through preferential tax treatment and other means.

Some studies suggest that this law discourages US companies from increasing operations abroad — not necessarily because it’s so-much-better when they can bribe all the officials they want, but because of the oversight and reporting that comes with foreign direct investment, from not only the foreign government but also the SEC and the DOJ.

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