Compliance regulations and laws across jurisdictions serve as crucial safeguards against corruption, money laundering, and other illicit activities, creating a level playing field for businesses and fostering trust in the international business landscape.
To navigate this complex regulatory landscape successfully, organizations must invest in comprehensive compliance programs, including robust risk assessments, regular audits, and continuous training to ensure adherence to the diverse and evolving legal frameworks across different jurisdictions. Jurisdictions have their relevant regulations and laws, to cover different financial crimes, which organizations need to adopt and implement.
Compliance Regulations and Laws across Jurisdictions
Below are some of the major legislative and regulatory requirements, prescribed by different jurisdictions:
United States (US)
The Foreign Corrupt Practices Act, FCPA, was enacted to make it unlawful for certain classes of persons and entities to make payments to foreign government officials to assist in obtaining or retaining business. The FCPA’s anti-bribery provisions generally prohibit making corrupt payments (or giving anything of value) to a foreign official to obtain or retain business.
Specifically, the anti-bribery provisions of the FCPA prohibit the willful use of the mail or any means of the instrumentality of interstate commerce corruptly in furtherance of any offer, payment, promise to pay, or authorization of the payment of money or anything of value to any person, while knowing that all or a portion of such money or thing of value will be offered, given or promised, directly or indirectly.
To the foreign official to influence the foreign official in his or her official capacity, induce the foreign official to do or omit to do an act in violation of his or her lawful duty or to secure any improper advantage to assist in obtaining or retaining business for or with, or directing business to, any person.
A foreign official refers broadly to an employee of a foreign government, whether high or low in rank. It also includes employees of a foreign government, which may include a state-owned or state-controlled enterprise. The courts consider factors such as the foreign state’s degree of ownership and control over an entity in determining whether it is an “instrumentality” of the government. The definition further includes a foreign political party or candidate, as well as officers or employees of public international organizations.
The anti-bribery provisions apply to persons and entities including domestic concerns and territorial concerns. The provisions also apply to their officers, directors, employees, agents, or stockholders acting on their behalf. Issuers and domestic concerns must use interstate commerce (defined to include “trade, commerce, transportation, or communication among the States or between any foreign country and the States”) in furtherance of the corrupt act to fall within the scope of the FCPA.
The anti-bribery and corruption requirements of the FCPA have applied to all U.S. persons. With the enactment of certain amendments, the anti-bribery provisions of the FCPA now also apply to foreign firms and persons who, directly or through agents, act in furtherance of such a corrupt payment to take place within the jurisdiction and territory of the US.
The FCPA also requires companies whose securities are listed in the US, to meet accounting requirements and provisions.
The accounting requirements, designed to operate in tandem with the anti-bribery provisions of the FCPA, require corporations to:
(a) Make and keep appropriate books and records that fairly reflect the transactions of the corporation, and
(b) Devise and maintain an adequate system of internal accounting controls.
The FCPA’s accounting provisions, require keeping accurate books and records in a reasonable level of detail and to devise and maintain adequate internal accounting controls. The purpose of the accounting provisions is to ensure that entities do not conceal bribes in their financial accounts or use corporate funds for improper purposes.
Although enacted as part of the FCPA, the accounting provisions do not apply just to bribery but set forth a broad standard to be applied to a public company’s accounting for its liabilities and assets. Principal officers of the entity must evaluate and assess these internal controls, and certify that they are well-designed, as part of periodic financial information filings with the Securities and Exchange Commission (SEC).
The Department of Justice (DOJ) and the SEC share enforcement authority under the Act. The DOJ has criminal enforcement authority and the SEC has civil enforcement authority over issuers. In practice, the DOJ and SEC settle most FCPA investigations with subject companies rather than obtaining a conviction or court judgment.
The FCPA settlements generally require cooperation with the government, payment of penalties, and remediation commitments. Some in the business community argue for strengthened affirmative defenses, based on a company’s implementation of a strong, FCPA compliance program. Proponents argue that such a program may provide businesses with certainty about legal exposure. The FCPA settlements mean that there is a relative lack of judicial precedent when it comes to interpreting key FCPA provisions, making it difficult for entities to understand their precise liabilities under the Act.
European Union (EU)
As corruption may take many different forms, such as bribery, trading in influence, and abuse of power, but can also be in the form of conflicts of interest, insider trading, or revolving doors between the public and the private sectors. European Union (EU) aims to minimize the risks of bribery and corruption it’s serious widespread. As corruption constitutes a threat to the security of the financial system of the organization, which may lead to reputational and financial losses., in terms of penalties and customer loss, therefore, many EU Member States have already implemented anti-bribery laws which are stricter than those implemented in the US.
Most EU Member States have enacted anti-bribery laws with heavy fines. When compared to the UK Bribery Act, however, such laws are generally more limited in scope and tend to focus on bribery of public officials. Most are however at least consistent with FCPA. The Treaty on the Functioning of the EU recognizes corruption as a “euro-crime”, listing it among the, particularly serious crimes with a cross-border dimension for which minimum rules on the definition of criminal offenses and sanctions may be established It acts as a drag on economic growth, by creating business uncertainty, slowing processes, and imposing additional costs.
Although the nature and scope of corruption may differ from one EU State to another, it harms the EU as a whole by lowering investment levels, hampering the fair operation of the Internal Market, and reducing public finances. the Commission has been given a political mandate to measure efforts in the fight against corruption and to develop a comprehensive EU anti-corruption policy, in close cooperation with the Council of Europe Group of States against Corruption (GRECO), It is in the common interest to ensure that all Member States have effective anti-corruption policies and the EU supports the Member States in pursuing this work.
The EU report related to Anti-Corruption which was published in the year 2014, highlighted that the scope and nature of corruption vary from country to country and that the effectiveness of the anti-corruption program is quite different and relevant to different countries. The Anti-Corruption report highlighted that corruption requires greater attention by all EU countries. The Commission’s anti-corruption efforts are centered around the following main pillars: mainstreaming anti-corruption provisions in EU horizontal and sectorial legislation and policy; monitoring performances in the fight against corruption by the Member States; supporting the implementation of anti-corruption measures at the national level via funding, technical assistance, and experience-sharing; improving the quantitative evidence base for anti-corruption policy.
One tool to help anti-corruption efforts is ensuring a common high standard of legislation, either specifically on corruption or incorporating anti-corruption elements in other sectoral legislation. The Union has a general right to act in the field of anti-corruption policies, within the limits established by the Treaty on the Functioning of the European Union. The EU must ensure a very high level of security, including through the prevention and combating of bribery and corruption crimes and the approximation of applicable criminal laws. The Treaty recognized corruption as a ‘euro-crime’, therefore the EU holds legislating powers to regulate bribery and corruption.
United Kingdom (UK)
The United Kingdom ratified the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (Anti-Bribery Convention) on 14 December 1998. Since that time, the U.K. has criminalized the bribery of foreign public officials principally by relying on the Prevention of Corruption Act 1906, the Public Bodies Corrupt Practices Act 1889, and the common law bribery offense.
Until a 2001 amendment, none of these offenses expressly referred to bribery of foreign public officials. Corporate liability for foreign bribery was available under the common law. Efforts to reform the U.K.’s patchwork of bribery offenses date back many years. In the most recent Phase 2, the Working Group recommended that the U.K. enact effective and modern foreign bribery legislation by the Convention at the earliest possible date and as a matter of high priority. It also recommended that the U.K. adopt appropriate legislation, to achieve the effective corporate obligation for foreign bribery.
The U.K. enacted the Bribery Act 2010 which revamped the UK’s legislative scheme of bribery incidents. The Act cover bribery of domestic and foreign public officials, and persons in the private sector. Corporate liability would continue to be governed by the identification theory. In addition, the Act established a new offense of failure of commercial organizations to prevent bribery. It establishes an offense against senior officers of a body corporate or partnership, where the body corporate or partnership commits a bribery offense under the Act with the consent or connivance of the senior officer.
Section 6 of the Bribery Act creates an intentional foreign bribery offense. The offense applies to a person who intends to influence a foreign public official, and who intends to obtain or retain a business or an advantage in the conduct of business.
Section 1 of the Bribery Act also creates an intentional offense. The offense applies to a person who offers, promises or gives the advantage to induce or reward the improper performance of a relevant function or activity. It also applies to a person who knows or believes that the acceptance of an advantage would constitute the improper performance of a relevant function or activity.
Section 6(5) of the Bribery Act defines a foreign public official as a person who;
(a) Holds a legislative, administrative, or judicial position of any kind, whether appointed or elected, of a country or territory outside the United Kingdom (or any subdivision of such a country or territory).
(b) Exercises a public function, whether for or on behalf of a country or territory outside the United Kingdom (or any subdivision of such a country or territory) or for any public agency or public enterprise of that country or territory (or subdivision).
(c) Is an official or agent of a public international organization.
The Bribery Act is not limited to the bribery of public officials. The offense applies to the giving, offering, or promise of an advantage to any person who performs a relevant function or activity. A relevant function or activity includes any function of a public nature; any activity connected with a business; any activity performed in the course of a person’s employment; and any activity performed by or on behalf of a body of persons (whether corporate or unincorporated).
The person in question must also either be expected to perform the relevant function or activity in good faith or impartially, or be in a position of trust by performing it. A relevant function or activity need not have any connection with the U.K. and may be performed outside the U.K. As per the act, a public international organization is an organization, whose members are countries or territories; governments of countries or territories; other public international organizations; or a mixture of any of these entities.
The Working Group decided to evaluate the practices, to determine the Bribery Act’s impact on the U.K.’s implementation of the Anti-Bribery Convention. The Working Group’s decision is consistent with its established practice in cases where legislative developments in its member countries could significantly affect the Convention’s implementation. The evaluation focussed on the offense of the Bribery Act, and the corporate offense of failure to prevent bribery. The general bribery offense may also apply to foreign bribery in certain circumstances.
The Bribery Act expressly covers the offer, promise, or gift of a bribe to a foreign public official or another person at the officials’ request or with the official’s assent or acquiescence. It also covers bribes given to a third party. Accordingly, the U.K. authorities state that it would cover third parties such as political parties, charities, non-profit organizations, associations, partnerships, and all types of legal persons. The Act requires the adoption of necessary measures to establish that complicity in, including incitement, aiding and abetting, or authorization of an act of bribery of a foreign public official shall be considered a criminal offense.
Singapore
As other countries are focussing on the control and management of bribery and corruption, Singapore is also one of those countries, which is prominent in establishing the framework for the organizations operating in the jurisdiction of Singapore, to implement the framework and related controls, to identify and prevent the bribery and corruption.
The Singapore government resolved early on to fight corruption as a strategic imperative to sustain a healthy state of governance, rule of law, and economic and social development. From the early days of self-government, the new political leaders took it upon themselves to set good examples for public officers to follow. They created, by personal example, a climate of honesty and integrity, and made it known to public officers in no uncertain terms that corruption in any form would not be tolerated.
The government’s stand against corruption was also made clear in 1960 when the Parliament enacted a revised anti-corruption law, the Prevention of Corruption Act (PCA), to replace the Prevention of Corruption Ordinance. New sections in the PCA made anti-corruption enforcement and prosecution easier. Since then, the Prevention of Corruption Act had undergone various amendments to increase the power of investigation of the CPIB officers and enhance the punishment for corruption, and plug any loophole to prevent exploitation by criminals.
The policy that the perpetrators should not benefit from corruption was further fortified by the enactment of the Corruption (Confiscation of Benefits) Act in 1989. This Act has been replaced by the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act in 1999. The Act provides the Court with powers to confiscate properties that a person convicted of a corruption offense cannot satisfactorily account for, or when the properties are found to be benefits of corruption offenses.
Before we touch on any corruption control framework, it is important to identify the root causes of corruption to understand why our framework worked for Singapore. According to a study by Dr. Leslie Palmier, the key reasons for corruption were, “Low Salaries, Ample Opportunities for Corruption and Ineffective Policing.
Singapore is now well regarded globally as one of the few countries in the world with a low incidence of corruption. In 2016, Transparency International’s Corruption Perceptions Index (TI-CPI) ranked Singapore as the 7th least corrupt country in the world and the least corrupt Asian country with a score of 84 out of 1001.
The Political and Economic Risk Consultancy (PERC) also ranked Singapore as the least corrupt country in Asia in 20162, a position Singapore held since 1995. Over the years, Singapore has established an effective anticorruption framework which has seen it transform from a country rampant with corruption to one of the least corrupt nations in the world.
Public support, so vital in any anti-corruption program, is best won through successful action against the corrupt, regardless of color, creed, or status, and executed without fear or favor, firmly and fairly. Public support cannot be taken for granted. The Bureau makes itself readily accessible to the public. Anyone with a complaint of corruption has many easy means to complain. They can go through the Internet, walk into the Bureau, through phone calls, through letters, and faxes.
As we are accessible, we even find the public coming to us with problems that are not corruption matters but matters more appropriately handled by other government departments such as the Police, Immigration, or Ministry of Manpower. Our Bureau will not turn away these complainants but will take down the information and pass it on to the relevant department. This is in line with the spirit of the government’s “No Wrong Door” policy. This approach helps to keep the public’s faith in the Bureau and the government.
To ascertain that we continue to be effective and trusted, public perception surveys are done regularly by the Bureau to gauge public sentiments. The CPIB plays an active role in the international community’s fight against corruption and regularly represents Singapore at various international anti-corruption platforms.
There are multiple factors in a successful anti-corruption strategy, which requires a comprehensive approach. One cannot deal with the scourge of corruption with isolated initiatives, no partnership, and without understanding the nature of corruption. An integrated national plan incorporating the whole government and the private sector is necessary to increase the chances of success in fighting corruption.
Final Thoughts
Compliance regulations and laws across jurisdictions play a vital role in safeguarding against corruption, money laundering, and other illicit activities, fostering a level playing field for businesses and cultivating trust in the global business landscape. To navigate this complex regulatory environment effectively, organizations must invest in comprehensive compliance programs that include robust risk assessments, regular audits, and continuous training to ensure adherence to diverse and evolving legal frameworks in different jurisdictions.
Each jurisdiction, such as the United States, the European Union, the United Kingdom, and Singapore, has implemented specific regulations and laws to address various financial crimes, necessitating organizations to adopt and implement the relevant measures. By embracing these regulations and laws, businesses can contribute to the prevention and detection of financial crimes, thereby promoting integrity and stability in the international business community.
