Foreign Corrupt Practices Act

Bribery Exceptions (3) Bribery Penalties are Civil and Criminal

-"Grease" Payments - Intended to facilitate (not obtain) business; must be really infrequent and small - Legal Payments - Payments written into the law of a foreign country - Reasonable and bona fide expenses - Truly has to be reasonable given the circumstances

International Anti-Bribery and Fair Competition Act (1988)

-Prohibits paying bribes to gain any unfair advantage - Prohibits payments to officials of international organizations (includes NGO's) - Don't have to be in the U.S. to be classified under the act

Accounting Provisions for Anti-Bribery (Books and Records)

All companies registered with the SEC must keep reasonably detailed records with accurately and fairly reflect the company's financial activities Purpose: To Identify.. - Illegal transactions - Falsification of records - "disguised" transactions

Note for Auditors regarding FCPA and Money Laundering Control Act

Both require external auditors to report clients who are engaged in money laundering

Money Laundering

Def: The process by which one conceals illegal income and disguises it to make it appear legitimate - Usually associated with dangerous criminal activities (as well as tax evasion)

Bank Secrecy Act (1970) (3)

Financial institutions must: - Report cash transactions more than 10k - ID the person conducting the transaction -Maintain a record of these transactions

Purpose of The FCPA

Post Watergate response to: -Illegal Foreign bribes paid by U.S. Companies - Inacurate Records/procedures Note: violations of SOX are violations of FCPA also

Money Laundering Control Act (1986) (4) Money laundering penalties: civil and criminal

Prohibits the following: - financial transactions that promote or conceal illegal activity - transporting laundered money into/out of the U.S. -Transactions over 10k in criminally derived property - attempts to avoid reproting requirements

Accounting Provisions (Internal Controls) Penalties for violating accounting provisions - criminal and civil

Public companies must devise and maintain a system of internal accounting controls Purpose: To provide reasonable assurance that... - all transactions are legitimate - Records are accurate - assets are handled properly - book value of assets are correct

Rule 13b 2-2 (FCPA)

The FCPA prohibits companies from lying to their auditors

Original Anti-Bribery Provisions

U.S. Companies (directors, officers shareholders, agents, etc) are prohibited from offering anything of value to: - foreign public officials - foreign political parties - foreign candidates for office .....in order to obtain or retain business

"Knowing" Standard for anti bribery

Violation of anti-bribery requires either: Actual knowledge OR a conscious disregard (have a suspicion but look the other way)