What is the Foreign Corrupt Practices Act?

What is the Foreign Corrupt Practices Act?

The Foreign Corrupt Practices Act is an anti-bribery act implemented by the U.S. Securities and Exchange Commission (SEC) in order to eliminate the actions regarding exchange of bribes in terms of business purposes. The Foreign Corrupt Practices Act was introduced by the U.S. Securities and Exchange Commission (SEC) in the year 1977 by observing the need of implementing an anti-bribery act within business dealings. The Foreign Corrupt Practices Act ensures the prohibition of exchange of bribes from the foreign officials in terms of attaining assistance and retention within business purposes. The Foreign Corrupt Practices Act is not only practised within United States, but the implementation of relative act has gone beyond the borders of the United States. The Corrupt Practices Act deals with the prohibition of exchange of bribery payments in terms of business purposes among the foreign officials, employees, directors, agents and stakeholders. The Act specifically implements on agents who may include consultants, external agents, joint-venture members, and distributors etc. which excessively share the exchange of bribes in terms of providing assistance within business purposes.

The Act strictly adheres the individuals and firms of United States (U.S.) from performing any exchange of bribery payments with the foreign officials in terms of business dealings. Moreover, the enforcement of Act does not hold any specified amount of bribery payments in terms of taking actions against the violators. According to the Act, even the exchange of small amounts of bribery payments will be considered violation of the Act and strict action will be taken against the violators as per the illustrations of the Act. Furthermore, the Act also implements regarding the proceedings of financial accounting practices. The Act also deals with ensuring maximum transparency within financial accounting practices. The Act adheres the officials to keep an upto date record of their financial dealings in order to have an authentic proof in terms of ensuring the performed transactions appropriately fulfils the illustrations of the Act. The financial records are also necessary for the officials in terms of ensuring the utilization of assets as per the authentication and authorization of the management.

The violators of the Foreign Corrupt Practices Act may face extreme legal consequences. The U.S. Securities and Exchange Commission (SEC) may take extreme action against the violators of the act. The Act illustrates equal sanction against the violators regardless of their designation and authority. The predetermined sanction is equivalent against the violators of the act whether they are employees, officers, stakeholders, directors or agents. Both the parties involving within the exchange of bribery payments will be sanctioned as per the illustrations of the Act. Moreover, the individuals and firms involved within violations of the act will have to refund their illegal earnings with specified amount of prejudgement interest and may also face substantial penalties. The firms performing the violations of the act may be subjected in terms of oversight through independent consultants. The U.S. Justice Department and the U.S. Securities and Exchange Commission are equally concerned regarding the effective implementation of the Foreign Corrupt Practices Act. The commission has also established a specified unit in terms of making enhancements and amendments within the act.

The Foreign Corrupt Practices Act not only discourages the financial malpractices and corruption within U.S. but also discourages the false and inappropriate utilization of power and authority across the world. The authorities that come under the Act include officers, directors, employees, agents and stakeholders. The act also relates to the financial dealings with third party consultants such as agents and partners involved within joint ventures of the firms. Hence, the relative third-party consultants will also be sanctioned as per the act if found within exchange of any bribery activities and malpractices. The regulatory authorities who are responsible in terms of ensuring effective and adequate implementation of the act involve the U.S. Justice Department and the Securities and Exchange Commission (SEC). The U.S. Securities and Exchange Commission has also established a specified unit in terms of monitoring the matters of the act. Any individual or firm found within violations of the act will be sanctioned and penalized as per the illustrations of the act. Conclusively, it can be said that the implementation of the Foreign Corrupt Practices Act has proved useful to a greater extent in terms of reducing the rate of financial malpractices.