FCPA: GLOBAL BUSINESS PARTNER SCREENING

The Foreign Corrupt Practices Act (FCPA) was enacted to prevent the bribery of foreign government officials for commercial advantage. Whilst this is often standard policy at corporate head offices, ‘on the ground’ realities often mean that managers tasked with operating your business in emerging markets may attempt to circumvent regulations to achieve a sale.

Corrupt payments are rarely openly sought; instead, bribes are often exchanged by contracting a company associated with the politician to provide ‘services’ (i.e. international vendors), or by appointing a sales agent associated with a government official to close the deal.

The risks of not knowing the background of your international vendors or business partners include:

• Unwittingly doing business with Politically Exposed Persons (PEPs) - subjecting such relationships to risk assessment is a cornerstone of any FCPA compliance programme.
• Not knowing the ownership and management behind your international vendors - this increases the risk of being defrauded by ‘tender rigging’or purchasing fraud, and will make it easier for criminals to steal your intellectual property.
• Being associated with criminals who are seeking an entry point into the global financial system towards processing the proceeds of their crimes.

Section 302, Paragraph 5 of the Sarbanes-Oxley Act (SOX) relates to the disclosures management must make to its auditors. It includes “any fraud, whether material or not, that involves management or other employees who have a significant role in the issuer’s internal controls.” Section 404 requires a company present a written presentation of the effectiveness of its internal controls. The SEC states “internal controls must include policies and procedures that address Fraud Detection”.

Any company not actively examining the history of its business partners to determine past involvement in fraud will have significant difficulties in being able to demonstrate compliance with either of these sections.

World-Check’s IntegraScreen reports provide a cost-effective due diligence screening programme that meets your legal and compliance obligations under the FCPA.

Due diligence report benefits

• Global availability
• Fast turnaround
• Legal and discreet
• Exhaustive research of all available public records conducted in English and foreign languages.

World-Check due diligence reports are relied upon by eight of the top ten investment banks, four of the top five technology firms as well as government agencies and transnational government bodies worldwide.

 Find out more about our due diligence reports here.