The Foreign Extortion Prevention Act: Targeting the “Demand” Side of Bribery
On December 14, the U.S. Congress passed the Foreign Extortion Prevention Act (FEPA), which, if signed by President Biden, will make it a crime for “any foreign official or person selected to be a foreign official to corruptly demand, seek, receive, accept, or agree to receive or accept, directly or indirectly, anything of value” from a U.S. person or company.
This bipartisan legislation — part of the National Defense Authorization Act of FY24 — extends the federal domestic bribery statute (18 U.S.C. § 201) to foreign officials and complements the U.S. Foreign Corrupt Practices Act (FCPA). While the FCPA targets the “supply side” of foreign bribery (e.g., offering and paying bribes), it does not apply to the “demand side” (e.g., demanding and receiving bribes). The FEPA helps fill that gap.
The FEPA’s broad definition of a “foreign official” is similar but not identical to the FCPA’s definition. Under the FEPA, a “foreign official” includes:
- Any senior foreign political figure
- Any official or employee of a public international organization
- Any person acting in an official capacity for or on behalf of a government, department, agency, instrumentality, or public international organization
- Any person acting in an unofficial capacity for or on behalf of a government, department, agency, instrumentality or a public international organization
To be a crime under the new legislation, a foreign official’s demand or receipt of a “thing of value” must be:
in return for —
(A) being influenced in the performance of any official act;
(B) being induced to do or omit to do any act in violation of the official duty of such foreign official or person; or
(C) conferring any improper advantage,
in connection with obtaining or retaining business for or with, or directing business to, any person.
So, like with the FCPA, there is a business-nexus requirement. In other words, there must be some quid pro quo related to a business advantage.
Penalties under the FEPA are steep: Any foreign official who violates the statute can be sentenced to up to 15 years in prison and fined either $250,000 or the monetary value of three times the value of the bribe.
The FEPA specifically states that the law applies extraterritorially. But while broad, the FEPA’s jurisdiction is not unlimited. Under the FEPA, a foreign official can be prosecuted in the United States for demanding or receiving bribes from (1) any person while in the territory of the United States; (2) an issuer of securities in the United States (as defined in the FCPA); or (3) any “domestic concern” (also as defined in the FCPA). A “domestic concern” includes U.S. citizens, nationals, and residents, as well as entities with a principal place of business or organized in the United States.
In addition to extending criminal liability to foreign officials, the FEPA requires annual reports from the Attorney General on, among other things, demands by foreign officials for bribes, the efforts of the Department of Justice (DOJ) and foreign counterparts to prosecute such cases, and the resources needed by DOJ for enforcement.
The FEPA represents more of an evolution than revolution in statutory authority to hold foreign officials accountable for corruption. Even though corrupt foreign officials cannot be prosecuted under the FCPA, they have been charged with and convicted of money laundering offenses in U.S. courts. Laws like the Foreign Agent Registration Act, the Magnitsky Act, and the mail and wire fraud statutes also have been available to U.S. authorities going after foreign corruption.
What the FEPA does is make it easier for federal prosecutors to bring cases in the United States against foreign officials who demand or receive bribes. For example, the FEPA may reach certain conduct that anti-money laundering laws do not, such as the mere demand of a bribe from a U.S. company, or the receipt of a bribe, in cash, from a U.S. citizen.
The FEPA also signals the U.S. government’s continued commitment to address international corruption. It marks concrete legislative action that furthers the Biden administration’s official Strategy on Countering Corruption, which views corruption as a threat to U.S. national security and emphasizes the need to hold foreign officials accountable for corruption that affects U.S. interests.
With enforcement of the FEPA to crack down on the demand side of foreign bribery, we expect to see continued use of the FCPA to crack down on the supply side. After all, it takes two to make a bribe. And often it takes more than two — with third parties helping pass on and conceal illicit payments. Anti-money laundering laws thus will remain another important tool that can be deployed against bribe payers and bribe takers, as well as their intermediaries. Indeed, the threat of enforcement under these laws may encourage individuals and companies to cooperate with U.S. government investigations of foreign officials implicated in corruption schemes, and the U.S. government may be willing to give more credit for such cooperation if it results in the successful prosecution of a foreign official.
Finally, while we expect that prosecutors will make good use of the FEPA, we do not expect them to invoke the statute in every case where it might apply. The prosecution of foreign government officials often raises diplomatic and other considerations that may counsel against filing a criminal action in the United States, especially where enforcement action can be taken in another country.
For questions on this topic, please reach out to the authors or any of their colleagues in Arnold & Porter’s White Collar Defense & Investigations practice group.
© Arnold & Porter Kaye Scholer LLP 2023 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.