Page 57 - U.S. FOREIGN CORRUPT PRACTICES ACT

A Resource Guide to the U.S. Foreign Corrupt Practices Act. Second Edition.

FCPA and money laundering conduct where they bribery context. For example, as a condition of its
conducted financial transactions involving the facilitation of direct loans and loan guarantees to a
proceeds of specified unlawful activities—violations foreign purchaser of U.S. goods and services, the
of the FCPA, the criminal bribery laws of Haiti, and Export-Import Bank of the United States requires
wire fraud—in order to conceal and disguise these the U.S. supplier to make certifications concerning

proceeds. commissions, fees, or other payments paid in
Notably, although foreign officials cannot connection with the financial assistance and that
be prosecuted for FCPA violations, 287 they can be it has not and will not violate the FCPA. 290 A false
prosecuted for money laundering violations where certification may give rise to criminal liability for
the specified unlawful activity is a violation of the false statements. 291
FCPA. 288 Similarly, manufacturers, exporters, and

brokers of certain defense articles and services
Mail and Wire Fraud are subject to registration, licensing, and reporting
The mail and wire fraud statutes may also requirements under the Arms Export Control

apply. In 2006, for example, a wholly owned foreign Act (AECA), 22 U.S.C. § 2751, et seq., and its
subsidiary of a U.S. issuer pleaded guilty to both implementing regulations, the International Traffic
FCPA and wire fraud counts where the scheme in Arms Regulations (ITAR), 22 C.F.R. § 120, et seq. For
included overbilling the subsidiary’s customers— example, under AECA and ITAR, all manufacturers
both government and private—and using part of and exporters of defense articles and services must

the overcharged money to pay kickbacks to the register with the Directorate of Defense Trade
customers’ employees. The wire fraud charges Controls. The sale of defense articles and services
alleged that the subsidiary had funds wired from valued at $500,000 or more triggers disclosure
its parent’s Oregon bank account to off-the-books requirements concerning fees and commissions,
bank accounts in South Korea that were controlled including bribes, in an aggregate amount of
by the subsidiary. The funds, amounting to almost $100,000 or more. 292 Violations of AECA and ITAR

$2 million, were then paid to managers of state- can result in civil and criminal penalties. 293
owned and private steel production companies
in China and South Korea as illegal commission Tax Violations
payments and kickbacks that were disguised Individuals and companies who violate the
as refunds, commissions, and other seemingly FCPA may also violate U.S. tax law, which explicitly

legitimate expenses. 289 prohibits tax deductions for bribes, such as false
sales “commissions” deductions intended to
Certification and Reporting conceal corrupt payments. 294 Internal Revenue
Violations Service – Criminal Investigation has been involved

Certain other licensing, certification, and in a number of FCPA investigations involving tax
reporting requirements imposed by the U.S. violations, as well as other financial crimes like
government can also be implicated in the foreign money laundering.

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