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Client Alert: Attorney General Bondi Changes Direction on FCPA and FARA Prosecutions

On her first day in office, Attorney General Pam Bondi announced several changes to the standards governing the exercise of prosecutorial discretion, charging decisions, plea negotiations and sentencing recommendations. Two of these actions – relating to the Foreign Corrupt Practices Act (FCPA)[1] and the Foreign Agents Registration Act (FARA)[2] – directly impact U.S. corporations that do business overseas and foreign entities and their agents that seek to influence the U.S. government and U.S. public sector. 

Ms. Bondi announced that the Department of Justice will focus its efforts on combating illegal immigration, drug cartels, transnational organized criminal organizations, human trafficking, and the importation of illegal drugs into the United States. As a part of that effort, she instructed the Criminal Division’s FCPA Unit to prioritize investigations of foreign bribery that facilitates the criminal operation of cartels and transnational criminal organizations, and shift focus away from investigations lacking such a connection. Examples of cases that would merit prosecution include bribery of foreign officials to facilitate smuggling and the trafficking of narcotics and firearms.

This was quickly followed by an Executive Order from President Trump suspending enforcement of the FCPA for 180 days, ordering Attorney General Bondi to conduct a thorough review of all pending FCPA cases and investigations, and requiring specific Attorney General approval to bring any new cases under the FCPA.[3]  The Attorney General may extend such review period for an additional 180 days. The Executive Order directed the Attorney General to “issue updated guidelines or policies, as appropriate, to adequately promote the President's Article II authority to conduct foreign affairs and prioritize American interests, American economic competitiveness with respect to other nations, and the efficient use of Federal law enforcement resources.”

While the Executive Order and the Attorney General’s memoranda are an undeniable signal that this Administration does not intend to prioritize FCPA enforcement in traditional sectors such as defense contracting and the oil & gas industry, the enforcement pause is temporary. The expectation of new guidance and policies from DOJ argues against a radical change in corporate compliance policies designed to protect these companies from the substantial liability they can face under the FCPA. At a minimum, U.S. companies should wait for the dust to settle following the mandated policy review by the Attorney General before considering any substantive revisions to their compliance programs.

In addition, AG Bondi sought to free agency resources for her enforcement priorities by eliminating the Foreign Influence Task Force in the National Security Division and instructing the Division to scale back on FARA prosecutions. Going forward, criminal charges under FARA are to be limited to conduct “similar to more traditional espionage” by foreign government actors. The FARA Unit has been instructed instead to focus on civil enforcement, regulatory initiatives, and providing compliance guidance to the public. This is a significant departure from the trend in recent years of a more expansive interpretation of the statute and increased criminal prosecution of violators.

Curiously, this de-emphasis of FARA criminal enforcement follows on the heels of proposed new FARA rules that were issued in early January during the waning days of the Biden Administration. Those draft rules propose to narrow significantly the registration and reporting exemptions for commercial activities and other activities not serving predominantly a foreign interest. They also call for more expansive disclaimer notices on informational materials that are distributed on behalf of foreign principals.  

It is possible that DOJ will reconsider the FARA rules and propose further changes to reinforce the Attorney General’s enforcement priorities. In fact, a narrower commercial activity exception, as outlined in the January proposed rules, seems at odds with Ms. Bondi’s focus on activities that are more akin to traditional espionage. The lawyers at Whiteford are following this rulemaking closely and will provide updates as they develop.

Our firm has extensive experience and expertise in advising and representing clients on these complex and evolving issues, and we are ready to assist you in navigating the challenges and opportunities presented by the U.S. regulatory and enforcement landscape. Please contact James Kahl or Christopher Chaisson if you have any questions or concerns regarding your compliance obligations, risks, or strategies related to the FCPA or FARA enforcement.