As was true in many areas of the law, Foreign Corrupt Practices Act (FCPA) enforcement in 2020—and anti-corruption enforcement more generally—was affected by the COVID-19 pandemic, but perhaps not as much as was initially expected. Although the number of Department of Justice (DOJ) and Securities and Exchange Commission (SEC) enforcement actions was down in 2020 compared to recent years, the DOJ and SEC both remained active in enforcing the FCPA, bringing major cases that set new records and issuing new updates to longstanding FCPA guidance. Below are four key developments from 2020:
- Two New Cases Top the Penalty Charts: The year started with the Airbus case, which set a new record at the time for FCPA penalties. The resolution involved coordination by the US with French and UK authorities, and resulted in $2.1 billion in penalties. In October 2020, however, the Airbus settlement was eclipsed by another record settlement, this time with The Goldman Sachs Group, Inc., which agreed to $3.3 billion in penalties imposed by the DOJ and SEC, becoming the largest combined FCPA penalty on record. This case also involved cooperation by US authorities with a number of foreign law enforcement agencies.
- Record-Breaking Year in Overall Penalties: As a result of these two resolutions, the year 2020 became a record-breaking one for penalties, even with a decrease in the number of enforcement actions, suggesting that US authorities continue to focus on major investigations with large penalties.
- Updated Enforcement Guidance: The DOJ and SEC also continued to provide guidance to the public on compliance with the FCPA. Specifically, US authorities updated the DOJ’s and SEC’s FCPA Resource Guide (Resource Guide) and the DOJ’s Evaluation of Corporate Compliance Programs Guidance (Compliance Guidance).
- Key Legal Rulings: In 2020, courts issued two important FCPA-related legal decisions. First, in June 2020, the US Supreme Court held in Liu v. SEC that the disgorgement remedy must be directly tied to ill-gotten gains, as it is supposed to benefit victims. It remains to be seen how this ruling will be applied in FCPA cases. Congress also acted in connection with SEC disgorgement power—passing legislation to expand the SEC’s ability to collect disgorgement for conduct within the past ten years, overruling in some respects the Supreme Court’s 2017 decision in Kokesh v. SEC. Second, in December 2020, the US Court of Appeals for the Second Circuit affirmed the district court opinion in United States v. Ho, holding, among other things, that: (i) an individual can be charged under both the 78dd-2 and 78dd-3 provisions of the FCPA, i.e., that these provisions are not necessarily mutually exclusive; (ii) a violation of 78dd-3 can be specified unlawful activity in connection with a money laundering charge; and (iii) that money transferred into and out of a correspondent account in the United States was sufficient to confer jurisdiction under the relevant money laundering statute even where “the United States is neither the point of origination nor the end destination for the money, but is instead just an intermediate stop along the way.” As discussed below, this expansive holding creates the possibility of an increase in the US authorities’ use of the money laundering statutes in lieu of or alongside FCPA charges.
The end of the Trump Administration also provides an occasion to look back on FCPA enforcement over the past four years. Despite predictions that the Administration would radically scale back anti-bribery enforcement, particularly in light of negative comments Donald Trump made about the FCPA before he was elected president, the Trump Administration’s approach to FCPA enforcement was largely business as usual, continuing prior trends of high levels of enforcement activity and large corporate penalties. The lesson is that, as has been true over the past several administrations, anti-corruption law enforcement in the US is a mostly non-partisan affair. And, perhaps just as importantly, that enforcement is no longer just a US affair, given the continued momentum in international anti-corruption law enforcement.