Watch: What’s in DOJ’s New Guidelines for FCPA Enforcement?

John Cunningham, leader of the Corporate Compliance Team at the law firm of Dickinson Wright, explains the U.S. Department of Justice’s new FCPA enforcement guidelines and how they impact supply chains.

In the past, guidance from DOJ on enforcing the Foreign Corrupt Practices Act would be done in concert with the U.S. Securities and Exchange Commission, and cover a wide range of objectives and compliance requirements. What the agency issued this time, Cunningham notes, was a much shorter document, focusing on five “priority areas” that align with the Trump Administration’s “America First” agenda.

The new guidelines, while not necessarily limited to Mexico, are very much concerned with the activities of Mexican drug cartels and how they are impacting supply chains operating in that country, Cunningham says. They seek to reveal money laundering and other illegal actions of the drug gangs, using the FCPA as one aspect of DOJ’s “most powerful weaponry” for fighting criminal activity.

In response, Cunningham says, companies need to enhance their due-diligence efforts, especially within areas of Mexico that post a high risk of involving cartels in supply chain activities. They should take special care to ramp up compliance in connection with third-party intermediaries, taking advantage of “the latest and greatest in electronic controls, and flagging any exceptions in payments in areas of high risk.”

Exactly how and where businesses should be deploying their resources for achieving due diligence depends on the industry and location of their operations. It might mean engaging more compliance experts at the point of production, or at corporate headquarters. “A little bit of both is ideal,” Cunningham says.

Self-reporting of violations that companies discover in the course of their internal investigations could be a good idea, he says, but “it’s very important to make a case-by-case analysis” before taking action in this regard.