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We were honoured to be joined at the annual Ethixbase360 Third Party Risk Summit by Charles Duross, Global Co-Chair of the FCPA and Global Anti-Corruption Practice at Morrison Foerster LLP and Charles Cain, Managing Director, Investigations & Compliance, Ernst & Young.
Duross and Cain bring a wealth of invaluable experience with them as former regulators; Duross as Chief of the FCPA Unit, Fraud Section, Criminal Division at the U.S. Department of Justice and Cain as Chief of the FCPA Unit at the SEC.
Their deep regulatory experience provided authoritative insight into the evolving FCPA landscape, particularly in a time of changing political and enforcement priorities. In an entertaining and forthright discussion, Cain and Duross touched on the following important points.
A decade of intensified enforcement
FCPA enforcement has surged over the past ten years, with 79% of total penalties occurring in that timeframe. Prosecutions have spanned multiple jurisdictions and industries, signalling broad application of the law. This growing momentum had led many to assume continued escalation, regardless of changes in U.S. leadership.
A pause in momentum under the Trump Administration
President Trump’s February 10 Executive Order marked a pivotal moment that outlined a shift in enforcement focus and introduced a 180-day period to review current FCPA investigations and freeze initiation of new FCPA investigations, with a narrow exception requiring explicit approval from the Attorney General. This pause created uncertainty among compliance professionals and raised questions about the future of anti-corruption enforcement.
New guidelines may shift priorities
Recent FCPA guidelines unveiled on June 9 place heightened focus on serious crimes, especially those connected to national security. These include links to cartels and transnational criminal organizations that should ensure that companies scrutinize potential third-party relationships that might intersect with organized crime. Cain elaborated, “organizations should be giving heightened consideration to the risk that their third-party suppliers/service providers may be ultimately owned/controlled by cartels and other criminal organizations. These groups are increasingly sophisticated in how they use otherwise legitimate business to facilitate their criminal activities.”
Focus on critical sectors
Industries tied to national security, particularly those involving critical infrastructure and defence, are expected to face increased scrutiny under the revised FCPA priorities. This highlights the growing convergence between anti-corruption enforcement and geopolitical risk.
A possible move toward individual accountability
The new guidelines direct prosecutors to focus on cases where individuals have engaged in misconduct, as opposed to attributing malfeasance to corporate structures. This instruction could signal a renewed focus on prosecuting individuals, which Duross and Cain speculated could lead to a cultural shift within companies. Namely, heightened scrutiny on individual misconduct could increase internal accountability and personal responsibility in ethics and compliance.
Risks of overlooking “small” cases
One concern raised by the panel was that an emphasis on major crimes might unintentionally allow significant corruption to go unaddressed. Cain stated, “These massive cases seen over time didn’t necessarily come through the door initially as massive cases.” Many large-scale cases begin with small irregularities, for example gaps in internal controls. By deprioritizing these smaller entry points, enforcement agencies may miss opportunities to uncover broader misconduct.
Navigating uncertainty and compliance
Despite enforcement shifts, businesses must remain vigilant. The uncertainty around FCPA’s future trajectory underscores the importance of robust internal controls and proactive third-party risk management. Referring back to U.S. laws and guidelines remains a foundational compliance strategy, particularly for multinationals navigating complex global operations. During times of uncertainty as Cain explains, “Back to basics was my theme last year, and I think it’s still a fair theme [as it explains] the basic infrastructure you need to have in place to have an effective compliance program.”
