Anti-bribery laws explained: UK Bribery Act and FCPA

Anti-bribery laws explained: UK Bribery Act and FCPA

The Foreign Corrupt Practices Act (FCPA) is a US anti-bribery law. The UK Bribery Act 2010 is the UK equivalent, and it is broader in several ways. Organizations that operate in both countries, or trade with either, often need to meet both. This guide gives a plain definition of each law and then the practical detail on what they require and how to comply.

What is the FCPA?

The FCPA is the US Foreign Corrupt Practices Act of 1977. It makes it illegal to offer or give anything of value to a foreign government official to win or keep business or to gain an improper advantage. It also requires certain companies to keep accurate books and records and to maintain internal accounting controls. The US Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) enforce it.

The two parts of the FCPA

Part	What it covers	Who enforces it
Anti-bribery provisions	Bans paying or offering bribes to foreign officials to obtain or keep business or an improper advantage	DOJ for all covered parties, and the SEC for issuers in some civil cases
Accounting provisions	Requires accurate books and records and a system of internal accounting controls	SEC for issuers, with the DOJ for criminal cases

Who the FCPA applies to

• Issuers: companies with securities listed on a US exchange, including foreign companies, and their officers, directors, employees and agents
• Domestic concerns: US citizens, residents and US-organized businesses
• Other persons who take an act in furtherance of a corrupt payment while in the United States

Companies can also be responsible for the acts of third parties such as agents, consultants and distributors if they know a bribe will be paid. Ignoring clear warning signs can count as knowledge.

Key FCPA concepts

Concept	What it means
Foreign official	Officials and employees of foreign governments, agencies and state-owned enterprises, plus political parties, candidates and public international organizations
Anything of value	Not only cash. It can include gifts, travel, entertainment, jobs, charitable donations and favors
Business purpose test	The payment must be meant to help get or keep business or secure an improper advantage
Facilitating payments	A narrow exception for small payments to speed up routine government actions. It is not an exception for bribes, and many companies ban such payments in their policies
Affirmative defenses	Payments that are lawful under written local law, and reasonable and bona fide expenses directly tied to promoting products or performing a contract

Penalties under the FCPA

Penalties can include large fines for companies and individuals, prison for individuals, disgorgement of profits and costs of independent monitors. Companies can also face debarment from government contracts. The DOJ and SEC publish a joint resource guide that explains how they apply the law, and the DOJ sets out how it evaluates compliance programs in separate guidance.

How to reduce FCPA risk

• Assess bribery risk by country, sector, customer type and use of intermediaries
• Set a clear policy on gifts, hospitality, travel, political donations and charitable giving
• Run risk-based due diligence on third parties before hiring them and monitor them afterward
• Include anti-corruption terms and audit rights in contracts with intermediaries
• Train staff and third parties in high-risk roles
• Keep accurate records so every payment is correctly described
• Provide a confidential way to raise concerns and investigate reports
• Test the program and update it as risks change

What is the UK Bribery Act?

The UK Bribery Act 2010 is the UK law that criminalizes bribery in both the public and private sectors, at home and abroad. It came into force on July 1, 2011. In England, Wales and Northern Ireland, the Serious Fraud Office (SFO) and the Crown Prosecution Service can bring cases. In Scotland, the Crown Office and Procurator Fiscal Service does so.

The four offenses in the Bribery Act

Section	Offense	What it covers
1	Bribing another person	Offering, promising or giving a financial or other advantage to induce or reward improper performance of a function
2	Being bribed	Requesting, agreeing to receive or accepting such an advantage
6	Bribing a foreign public official	Giving or offering an advantage to influence a foreign official in order to obtain or keep business or an advantage in business
7	Failure of a commercial organization to prevent bribery	A company is liable if a person associated with it bribes someone to obtain or keep business for the company

Section 7 and adequate procedures

Section 7 is the part that most affects organizations. It creates a strict liability offense: a commercial organization can be guilty if someone associated with it, such as an employee, agent or subsidiary, commits bribery on its behalf. There is no need to show that senior management knew. The only defense is to show the organization had adequate procedures in place to prevent bribery.

The UK Ministry of Justice guidance sets out six principles for adequate procedures.

Principle	What it means in practice
Proportionate procedures	Policies and controls that match the bribery risks and the size and nature of the business
Top-level commitment	Senior leaders set the tone and show that bribery is not tolerated
Risk assessment	Regular, documented assessment of internal and external bribery risks
Due diligence	Risk-based checks on the people who perform services for the organization
Communication and training	Policies are communicated and staff receive training suited to their role
Monitoring and review	Procedures are monitored and improved over time

Who the Bribery Act applies to

• Individuals and organizations with a close connection to the UK, wherever the conduct takes place
• Commercial organizations that carry on a business or part of a business in the UK, even if they are incorporated elsewhere, for the section 7 offense

Courts decide what counts as carrying on a business in the UK. A UK listing or a UK subsidiary is a strong indicator, but the rule depends on the facts.

Penalties under the Bribery Act

Individuals can face up to 10 years in prison and unlimited fines. Companies can face unlimited fines, confiscation of proceeds and exclusion from public contracts. Senior officers can be personally liable if they consent to or connive in an offense.

How to comply with the Bribery Act

• Document a bribery risk assessment and review it regularly
• Adopt an anti-bribery policy that covers gifts, hospitality, facilitation payments, donations and conflicts of interest
• Make the policy apply to everyone acting for the organization, including agents and joint venture partners
• Carry out proportionate due diligence on associated persons
• Train staff and keep records of attendance
• Set up reporting and whistleblowing channels
• Monitor high-risk areas and record the results
• Keep evidence of all of this, because the adequate procedures defense depends on it

The adequate procedures defense depends on records that show the program was live at the time. Policies, risk assessments and training logs all need to be current. Ideagen's regulatory compliance solution helps teams track regulatory updates and see which policies and processes they affect, which supports keeping anti-bribery policies up to date. It does not replace legal advice, and people still decide what each requirement means for the organization.

FCPA vs UK Bribery Act

Item	FCPA	UK Bribery Act 2010
Country	United States	United Kingdom
Bribery of foreign officials	Yes	Yes
Private sector bribery	Not directly covered by the anti-bribery provisions	Yes, covered in sections 1 and 2
Receiving a bribe	Not covered	Yes, covered in section 2
Corporate offense for failing to prevent bribery	No equivalent	Yes, section 7
Books and records rules	Yes, for issuers	No direct equivalent
Facilitation payments	Narrow exception	No exception
Defense	Affirmative defenses and a compliance program as a factor in enforcement	Adequate procedures defense under section 7
Enforcers	DOJ and SEC	SFO and the Crown Prosecution Service

Organizations subject to both laws usually build one anti-bribery program to the stricter standard. That means no facilitation payments, strong third-party due diligence and clear records.

A combined approach

• Map which laws apply to each entity and activity
• Use one policy that meets the stricter requirement on each topic
• Assess risk by country and by third party, and keep the results on file
• Run training that covers both laws where relevant
• Review the program when laws, enforcement guidance or business activity change
• Keep one record of evidence that can support either regime

Frequently asked questions

What is the FCPA in simple terms?

It is a US law that bans bribing foreign officials to win business and requires accurate company accounts.

What is the UK Bribery Act in simple terms?

It is a UK law that bans giving or taking bribes in any setting and makes companies liable if they fail to prevent bribery on their behalf.

Does the UK Bribery Act cover private sector bribery?

Yes. Unlike the FCPA's anti-bribery provisions, the UK law covers bribery between private parties as well as bribery of public officials.

Are facilitation payments allowed?

The FCPA has a narrow exception for them. The UK Bribery Act has no exception. Many organizations ban them in policy.

Can one company be subject to both laws?

Yes. A company with a US listing and UK operations can fall under both, so it should build to the stricter standard.