In recent years, several groundbreaking changes to U.S. domestic and foreign policy initiatives have been brought about as annual provisions of the National Defense Authorization Act (NDAA). With the 2024 iteration of the bill passing through Congress and ultimately signed into law by President Biden in late December, the NDAA has continued its attempts to bolster the effectiveness of various U.S. national security and intelligence programs. In what has developed into a growing trend however, aspects of the new legislation will once again see carryover into the financial space – specifically the realm of anti-money laundering (AML) compliance. Arguably the most substantial change in this regard comes in the form of new powers granted to the United States Justice Department (DOJ) in being able to prosecute corrupt foreign government officials who solicit or accept bribes from American companies or individuals, or from any person while in the United States.

The Biden Administration has been vocal in making anti-corruption a key pillar in the country’s national security agenda given the direct correlation between these activities and the proliferation of illicit finance. It appears the U.S. is seeking to continue its crackdown on corruption by targeting foreign officials utilizing bribery as a tool to manipulate American persons and companies in order to expand their business interests, a practice that remains common in spite of a major increase in anti-corruption measures taken by government bodies both domestically and abroad over the last decade. Coined the Foreign Extortion Prevention Act (FEPA), the new measure seeks to close loopholes left in the Foreign Corrupt Practices Act (FCPA) – a piece of legislation that is now approaching fifty years of run time. Since its inception, the FCPA has been used with regularity to punish U.S. companies for their efforts to engage in corruption, though the measure remained with limitations. Prior to FEPA, foreign bribery charges had been heavily one-sided, focusing primarily on charging individuals and firms that made various offerings or paid bribes to foreign government officials to acquire their business or favor. The bolstered legislation is expected to have significant effects on anti-bribery and anti-corruption investigations moving forward.

“Without this, the U.S. legal arsenal for combating international corruption was incomplete,” said Tom Firestone, a partner at law firm Squire Patton Boggs who specializes in white-collar crime, noting that the FCPA only covered the supply side of paying bribes, while FEPA addresses the demand side.² Scott Greytak, director of advocacy for Transparency International further backed the new legislation, regarding FEPA as “without question, the most consequential anti-foreign-bribery law passed in almost 50 years.”²

The penalties for violating FEPA are staunch. Those found to be in violation of the measure face up to 15 years’ imprisonment, fines of up to $250,000 or 3 times the monetary equivalent of the bribe received, or both. Prosecutors will also reportedly have the right to seek extradition as part of the provision. The Wall Street Journal writes that foreign officials charged with taking bribes can be arrested when they enter U.S. territory; if they live in a country with an extradition treaty with the U.S., or if they travel to a third country that has an extradition treaty with the U.S.” ² While the law can be limited by a foreign jurisdiction’s own individual laws, experts like former federal prosecutor Tom Firestone doubt that this will deter prosecutors from choosing to charge foreign nationals anyway. Firestone believes there is still significant value in publicly identifying these corrupt persons and keeping them confined to a single country. “The fact they can’t be brought to trial doesn’t mean the U.S. DOJ won’t charge them. That means they can still be arrested if they travel, or they become a prisoner in their own country because they are afraid to travel,” he said.²

            All told, the 63^rd annual NDAA raises the funding totals for national defense to $886 billion in fiscal year 2024 from $858 billion in 2023. The bill also contains a significant number of cybersecurity-related provisions while also increasing spending focus onto nuclear weapons and systems security and investment into artificial intelligence for national defense. With respect to the latter, the bill effectively establishes a Chief Digital and Artificial Intelligence Officer Governing Council for the military to provide policy oversight to ensure the coordinated employment of data and artificial intelligence capabilities across global Department of Defense (DOD) operations and missions.¹The bill will also focus on improved management of digital assets to support future military strategy.

Citations

1. Brumfield, Cynthia. “2024 US NDAA Boosts Nuclear Cybersecurity, Highlights Artificial Intelligence.” CSO Online, 18 Dec. 2023. 
2. Sun, Mengzi. “U.S. Prosecutors Can Charge Foreign Officials with Bribery under New Provision.” The Wall Street Journal, Dow Jones & Company, 2 Jan. 2024.