How does the Foreign Corrupt Practices Act (FCPA) relate to Document Management?

by Annemaria Duran

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The Foreign Corrupt Practices Act (FCPA) prohibits any bribery of foreign government officials to obtain new business or retain existing business. In addition, it requires businesses to keep books and records that accurately reflect all transactions and to maintain adequate accounting controls. It applies to all acts inside of and outside of the United States. Violations of the FCPA can result in lengthy SEC and DOJ criminal investigations and stiff penalties for companies. Charges through the FCPA can result in major reputation damage that is difficult to repair.

Companies should assess their risk. The FCPA considers certain countries to be a higher risk of bribery than other countries. Some of these higher risk countries include: Mexico, China, Brazil, Russia, and India. Intermediaries should be assessed. A company can be fined and prosecuted for FCPA violations by the Department of Justice, even if they did not approve and were not aware of violations taken by intermediaries and contractors. Companies should have a complete list of intermediaries, their contracts, and representation and warranties and should review it regularly. Additionally they should have records of indemnifications and termination provisions regarding FCPA compliance.

Companies should have a written FCPA policy that covers both USA and non-USA personnel. It should be included in regular compliance literature and be posted as part of the code of conduct. It should be distributed to all new employees as part of the on-boarding package and should continue to be shared with existing employees. Emphasis on FCPA compliance is required to increase the perceived level of importance for the typical employee. Further, as part of the FCPA policy, a main contact should be included as well as multiple ways for whistle blowers to anonymously report activities.

Regular training should be done regarding FCPA. Employees should understand the many aspects of bribery and that even charitable contributions can be considered bribery if used to obtain business. Furthermore, they should know that personnel can be criminally prosecuted and that the company can be liable for 2 million dollars in fines per violation or twice the amount of total profit from the transaction. Records of the training should be kept in your FCPA files.

Another way to enhance compliance with the FCPA is to initiate a FCPA compliance team. This should include legal, financial, and internal audit personnel. The team should have internal and external investigation capabilities. The team should be able to work with external auditors to ensure accuracy of the audits. In addition, identify countries where in-house counsel is not protected by client-attorney privileges. It can also be a good idea to seek external advice regarding specific localities. In many countries where in-house client-attorney privileges are not recognized, often outside counsel will give your company stronger privilege claims.

Keep accurate financial records, including petty cash accounts and maintain an internal system of controls. Even briberies must be accurately recorded in a company’s internal financial records according to FCPA rules. Cash accounts should be monitored and have restrictions of large cash withdrawals. External auditing and legal expertise should be consulted regarding FCPA recordkeeping and policies. Penalties can occur, even if bribery cannot be proved and the books are simply out of order.

EFileCabinet’s document management can provide companies a repository to keep and track documents as part of their FCPA compliance program.

There are several ways that eFileCabinet can help:

  1. eFileCabinet’s DMS is easier to use, implement, and manage. Our Cloud-based solution is accessible from any location and window’s style commands make using eFileCabinet intuitive for any user.
  2. Role Base Security allows for control over users permissions and access.
  3. Versioning provides controls over changes 3- audit logs provide transparency around changes, views and everything done in the filing cabinet.
  4. Web-based access and mobile apps provide easy access for all users and the capability to document any transaction FCPA related through a mobile device.