On December 14, 2023, the massive National Defense Authorization Act (NDAA) for fiscal year (FY) 2024 cleared Congress after months of negotiation, and on December 22, 2023, President Biden signed the Act into law. Among the many provisions contained in the NDAA is section 5101, titled "Prohibition of Demand for Bribe." This section, which amends the primary federal law prohibiting the bribery of U.S. public officials (18 U.S.C. §201), for the first time directly criminalizes the solicitation or receipt of bribes by a foreign official from persons or entities subject to the U.S. Foreign Corrupt Practices Act (FCPA). A little-appreciated wrinkle is that the new law applies not only to foreign government and political party officials, but also in many cases to the officials' immediate family members and close associates. 

This new statutory section, referred to as the Foreign Extortion Prevention Act (FEPA), is a key element of the Biden administration's Strategy on Combatting Corruption (SCC). We have previously discussed the SCC here and here. Specifically, SCC Pillar Three – "Holding Corrupt Actors Accountable" – calls for new statutory authority "to criminalize the demand side of bribery by foreign public officials." FEPA was introduced into both the 2021 and 2022 legislative sessions but failed to advance despite bipartisan support. FEPA's inclusion in the 2024 NDAA is a common strategy for enacting stalled legislation, since NDAAs generally are must-pass bills. For example, the FY 2021 NDAA contained several anti-corruption provisions, including the Corporate Transparency Act (CTA) and the Kleptocracy Asset Recovery Rewards Act (KARRA). 

Key FEPA Elements

Although it amends the primary U.S. domestic bribery statute rather than the FCPA, FEPA borrows many key concepts from the FCPA, including as to jurisdiction and key elements of the defined offense. Like the FCPA and 18 U.S.C. §201, FEPA employs criminal penalties and will be primarily enforced by the U.S. Department of Justice (DOJ). 

Requests and Payments. FEPA prohibits foreign officials from receiving bribes, subject to the limits discussed below. Like the FCPA, however, there can still be a violation even if there is no actual bribe, as FEPA also prohibits requests or demands for bribes as well as agreements to receive bribes. 

Jurisdiction. FEPA does not criminalize all requests for bribes from foreign officials globally; it is limited to demands with a nexus to the U.S. First, a foreign official cannot be prosecuted unless they "mak[e] use of the mails or any means or instrumentality of interstate commerce." In other words, it appears that a foreign official's passing of a note across a table or whispering of a demand in a restaurant in their own country is not subject to FEPA. Moreover, the foreign official must demand the bribe from the three categories of persons or entities covered by the FCPA: "issuers," "domestic concerns," or "any person…while in the territory of the United States." Thus, while broad, there are limitations as to FEPA's reach. A separate provision states that a defined offense under FEPA "shall be subject to extraterritorial Federal jurisdiction," presumably to clarify that the general presumption against extraterritorial application of U.S. laws does not apply to FEPA, but without waiving the limitations noted above.

Because defendants in FEPA actions will be individuals, it is likely that many cases will end up in court (unlike in the FCPA context) and challenges to jurisdiction will likely be an area for judicial scrutiny. The DOJ's record on jurisdictional challenges by FCPA defendants has been mixed and thus FEPA cases may result in relevant judicial decisions.

Who Is a Foreign Official? The FEPA prohibition covers actions by "any foreign official or person selected to be a foreign official." FEPA's definition for "foreign official" is significantly broader than the FCPA's definition, though like the FCPA, foreign officials include "any official or employee of a foreign government or any department, agency, or instrumentality thereof" and "any official or employee of a public international organization." 

Going beyond the FCPA's scope, FEPA's definition of "foreign official" includes "any senior foreign political figure, as defined in section 1010.605 of title 31, Code of Federal Regulations, or any successor regulation." The referenced section is contained in U.S. Department of the Treasury (Treasury) regulations related to standards of due diligence required to be exercised by financial institutions related to certain types of accounts, such as correspondent accounts. The regulation defines "senior foreign political figures" as both current and former senior government officials, senior "major foreign political party" officials, and "[s]enior executive[s] of a foreign government-owned commercial enterprise." "Senior" officials and executives are "individual[s] with substantial authority over policy, operations, or the use of government-owned resources."

The definition also includes any corporation "or other entity that has been formed by, or for the benefit of, any such individual"; an "immediate family member of any such individual" (defined in the regulation as "spouses, parents, siblings, children and a spouse's parents and siblings"); and any "person who is widely and publicly known (or is actually known by the relevant covered financial institution) to be a close associate of such individual." Because the definition includes immediate family members and known close associates, the scope of covered foreign officials is more consistent with the group often called "Politically Exposed Persons" (PEPs) than with the FCPA's more narrow definition. 

Anything of Value. Solicitation of "anything of value personally or for any other person or nongovernmental entity" is prohibited by FEPA. "Anything of value" in the FCPA has been interpreted broadly to include many types of benefits and the language in FEPA likely is intended to cover a similarly broad definition. The FEPA language also clarifies that the prohibition covers benefits not just to a soliciting official but to "any other person" – such as family members – or to any "nongovernmental entity" – such as a company controlled by the official.

Directly or Indirectly. The FEPA prohibition includes this language, also found in the FCPA, to confirm that benefits solicited or accepted indirectly by an official (through a third party, such as a family member, company, or other intermediary) are covered. FEPA does not include the FCPA's language on knowledge and thus does not directly import the "high probability" standard found there and used by the DOJ and U.S. Securities and Exchange Commission (SEC) in many FCPA cases. It is possible that fact patterns involving such indirect solicitation or receipt of benefits may create other opportunities for defendants to challenge prosecution allegations. 

Quid Pro Quo. Like the FCPA, a FEPA violation requires that a prohibited solicitation by or benefit received by a foreign official must be tied to a quid pro quo – that is, connected to some type of action (or inaction) or decision by the official. The benefit must relate to the official:

•    "Being influenced in the performance of any official act"
•    "Being induced to do or omit to do any act in violation of the official duty of such foreign official or person"
•    "Conferring any improper advantage"

"in connection with obtaining or retaining business for or with, or directing business to, any person."

As with some other elements, the scope of this prohibition is potentially broader than that of the FCPA, as it constitutes a shorter, more direct summary of the quid pro quo provisions in the FCPA.  

Rule of Construction. Subsection 5 of the section defining FEPA's offense contains a rule of construction confirming that FEPA "shall not be construed as encompassing conduct that would violate [the FCPA]… whether pursuant to a theory of direct liability, conspiracy, complicity, or otherwise." This rule is designed to keep the FEPA and FCPA enforcement regimes separate and is consistent with the DOJ's past approach to prosecuting officials who have received bribes. Such cases usually involve money laundering and related charges and have not involved FCPA allegations. 

Penalties 

FEPA's penalty section provides for a fine of up to $250,000 or an amount three times "the monetary equivalent of the thing of value" received or solicited by the foreign official. In addition to fines, a violation can result in up to 15 years in jail. 

DOJ Public Reporting to Congress 

The statute also contains a requirement that the DOJ deliver an annual report to the relevant congressional committees starting in December 2024 (one year after FEPA's enactment) on various issues, including details on "major" FEPA actions during the reporting year and an assessment of DOJ's "effectiveness" in enforcement, demands for bribes by officials from U.S. companies, the status of foreign enforcement related to such conduct, and the effectiveness of U.S. "diplomatic efforts…to protect [U.S. companies] from foreign bribery." FEPA requires that the report also be posted on the DOJ's public website. Such reports could become another key data point for companies' risk assessment updates. 

NDAA – Combatting Global Corruption Act (CGCA)

While less of a potential sea-change, we want to note another provision of the NDAA related to anti-corruption efforts. Section 5401 of the NDAA contains a separate set of anti-corruption related provisions summarized below: In general, the various provisions continue to elevate the role of the Department of State (State) in propelling global anti-corruption enforcement. 

Reporting on Countries' Anti-Corruption Efforts. By the end of 2025, and annually for seven years thereafter, the CGCA requires State to issue two reports – a public list of countries "where the government is sustaining or making good progress on anti-corruption efforts in accordance with the minimum standards set forth in" the CGCA, and a classified list of countries where the government "is making limited or no efforts to comply" with the CGCA minimum standards. The statute requires that both lists contain "brief descriptions" of the relevant efforts or lack thereof and justifications for placement on each list. 

Though it will almost certainly contain information that could be useful to compliance personnel at companies, the classified list is likely "off-limits" to them due to diplomatic sensitivities or other issues of "national interest" such as national security. Elements of the public list may be marked classified by State under certain circumstances. 

The CGCA defines four elements for the "minimum standards" by which State is to assess countries' anti-corruption efforts. Countries must have:

• Implemented anti-corruption laws "and established government structures, policies, and practices that prohibit corruption"
• Punished "any person…found, through a fair judicial process, to have violated such laws"
• Established "punishment for significant corruption that is commensurate with the punishment prescribed for serious crimes"
• Made "serious and sustained efforts to address corruption, including through prevention"

The CGCA also list 13 factors for "assessing government efforts to fight corruption." Factors include whether persons convicted of corruption are incarcerated, steps governments have taken to deter their own officials "from participating in, facilitating, or condoning corruption," whether the judiciary responsible for corruption cases is independent and impartial, and whether the country participates in mutual legal assistance in investigations of transnational corruption, among others. Finally, State's reports are also required to assess countries' compliance with relevant international treaty obligations, including the United Nations Convention Against Corruption (UNCAC) and the Organisation for Economic Cooperation and Development (OECD) Anti-Bribery Convention. 

Global Magnitsky Actions and Reporting. As reported previously, Treasury and State have continued to issue Global Magnitsky-related sanctions and visa restrictions against corrupt officials and their families and associates. A section of the CGCA requires the agencies to "evaluate" Global Magnitsky sanctions for "foreign persons engaged in significant corruption" "in all countries identified" in the classified "limited or no efforts" list and to report on such considerations to the relevant committees in mid-2026. This effort could result in a significant expansion of the use of Global Magnitsky sanctions, which can affect business networks outside of sanctioned officials' home countries. 

Embassy Points of Contact. The CGCA also requires State to designate an "anti-corruption point of contact" at each U.S. "diplomatic post to each country identified" on the classified "limited or no efforts" list or wherever State determines that such a need exists. These personnel's responsibilities are directed at U.S. agency coordination and interactions with host governments. Given that these points of contact are focused on countries on the classified list, it is unclear whether these designations will be public information and how such personnel might interact with company-based stakeholders. 

Takeaways

For companies and related compliance professionals, FEPA does not create a new area of potential direct liability. Rather, FEPA can provide a new tool for company personnel operating in host countries – a new and potentially persuasive response to any solicitation of benefits by host country officials. Such a response does not have to set out the complexities of potential jurisdictional or other legal interpretive arguments – it can focus instead on FEPA potentially directly applying to the official themselves, as well as on the increased pressure created by FEPA and the CGCA on the host government to prosecute the official for potentially corrupt actions. FEPA also adds another layer to the many definitions of public officials or foreign officials (depending on the statute), which may create further confusion for compliance analyses (for example, when conducting business with someone whose sibling or parent is a government official). 

Longer term, FEPA may also change the dynamic for internal investigations conducted outside the U.S. for companies with headquarters in the U.S. or shares listed on U.S. stock exchanges – the intended beneficiaries of FEPA. It is possible that potential FEPA exposure may end up making it difficult for investigating companies to acquire information outside the U.S. Given that the DOJ emphasizes extensive sharing of investigation-related information by companies who want to benefit from potentially favorable corporate enforcement policies, local parties, including potentially implicated officials, might take actions to stem the flow of relevant information, since it could now lead to direct exposure for foreign officials and their family members. 

In addition, the various reports required by the two NDAA provisions may eventually provide valuable data for companies updating their risk assessments in specific countries, though it appears likely that the most useful information may be restricted. 

For more information, please contact:

John E. Davis, jdavis@milchev.com, 202.626.5913

Daniel Patrick Wendt, dwendt@milchev.com, 202.626.5898

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