Recent Amendments to the Foreign Extortion Prevention Act Clarify Its Scope

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On December 22, 2023, President Biden signed the Foreign Extortion Prevention Act (“FEPA”) into law, establishing criminal liability under U.S. law for foreign officials who solicit or accept bribes from U.S. entities or while in the territory of the U.S. The recent Foreign Extortion Prevention Technical Correction Act, (the “amendments”), signed into law on July 30, 2024, as its name suggests, fixes a number of minor technical issues in the FEPA, but also significantly alters the statute’s scope.

The FEPA was intended to complement the Foreign Corrupt Practices Act (“FCPA”). Since 1977, the FCPA has prohibited U.S. companies or persons from making payments to foreign officials for purposes of obtaining or retaining business. The FCPA thus targets the “supply” side of bribery, providing for penalties for the payors of bribes to foreign officials, but not the “demand” side – the officials who receive or solicit those bribes. Prior to the 2023 enactment of the FEPA, U.S. enforcement authorities targeted the “demand” side of bribery under a miscellany of federal statutes, such as wire fraud or money laundering statutes.

The FEPA was intended to complement the FCPA by providing for criminal penalties for the “demand” side of bribery, bringing the U.S. bribery regime into line with other legal systems around the world which criminalize both the offer or payment and the solicitation or acceptance of bribes in international transactions. Under the FEPA, it is a criminal offense for any “foreign official,” as defined in the statute, to “corruptly demand, seek, receive, accept, or agree to receive or accept, directly or indirectly, anything of value,” from a U.S. domestic concern or issuer or from any person while the official is in the United States, in return for being influenced in the performance of their duties “in connection with obtaining or retaining business for or with, or directing business to, any person.” By its terms, the FEPA applies extraterritorially, to officials located outside the United States, so long as the jurisdictional nexus to the United States is met. The FEPA provides for penalties of up to $250,000 or three times the value of the bribe, or up to 15 years in prison.

The recent amendments make a number of minor and largely technical corrections and clarifications to the FEPA, but also alter the scope of the FEPA in significant ways:

First, the amendments narrow the definition of the “foreign officials” who may be subject to the statute. The original version of the FEPA defined “foreign official” broadly, to include not only “any official or employee of a foreign government or any department, agency, or instrumentality thereof” but also any person “acting in an unofficial capacity” for or on behalf of those entities. By including persons “acting in an unofficial capacity,” the FEPA went beyond the scope of the FCPA, raising considerable uncertainty about what “acting in an unofficial capacity” might mean in practice. The amendments remove the FEPA’s reference to persons “acting in an unofficial capacity.” However, the amendments also added language including persons selected for but not yet appointed to positions as a foreign official, as well as persons acting on behalf of a foreign official. The amendments also left in place language in the FEPA defining “foreign official” to include a “senior political figure,” as that term is defined in U.S. money laundering regulations. As amended, therefore, the FEPA now applies to foreign officials (including officials of foreign governments or their instrumentalities, or public international organizations such as the United Nations), persons selected to be foreign officials but not yet appointed (e.g., a president-elect), senior political figures (including current or former senior officials of government, major political parties, or state-owned enterprises, or their family members, associates, or business enterprises), or their agents or advisors acting on their behalf, but it does not apply to “persons acting in an unofficial capacity.”

Second, the amendments narrow the jurisdictional nexus to the United States required for liability under the Act. The original version of the FEPA applied whenever a foreign official solicited or accepted a bribe from any person, whether a U.S. person or not, while that person was within the United States, and regardless of whether the foreign official was within the United States. The original statute could thus apply where the foreign official was not in the United States, and the only nexus to the United States was the presence of a non-U.S. payor in the United States. As amended, the statute now provides for liability only (1) where the foreign official accepts or solicits a bribe from any person (whether a U.S. person or otherwise) while the foreign official is located within the United States, or (2) where the foreign official accepts or solicits a bribe from a U.S. issuer, domestic concern, or individual U.S. national or resident, or from an officer, employee or agent or stockholder acting on behalf of such an entity (whether or not the foreign official enters the United States).

Third, the original version of the FEPA applied where a foreign official solicited or accepted a bribe in return for “being influenced in the performance of any official act.” The statute thus required an “official act.” The amendments change the statute to track the language of the FCPA, so that the FEPA now applies to a broader range of conduct, including accepting or soliciting a bribe in return for being influenced in the performance of any act or decision … in [an] official capacity” (emphasis added), “being induced to do or omit to do any act in violation of the [official’s] lawful duty,” “conferring any improper advantage,” or “using the [official’s] influence … to affect or influence any act or decision of that government or instrumentality,” in connection with obtaining or retaining business for or with, or directing business to, any person.

It remains to be seen how U.S. enforcement authorities and courts may apply the FEPA going forward, but the amendments may help to harmonize it with the FCPA and its well-established body of caselaw. Non-U.S. governmental organizations, instrumentalities, and public international organizations should consult U.S. counsel to assess the impact of the FEPA on their anti-corruption compliance programs.