Safe Harbor for Self-Disclosure Under the Foreign Corrupt Practices Act

What Is the FCPA?

The Foreign Corrupt Practices Act of 1977 (“FCPA”), as amended (15 U.S.C. §§ 78dd-1, et seq.), prohibits U.S. companies and individuals from offering or paying bribes to foreign officials in order to obtain or retain business. The statute applies to conduct inside and outside the United States, and covers the use of:

• U.S. mail
• Interstate commerce
• Wire communications
• Any act within U.S. territory that furthers a corrupt payment by foreign firms or individuals

The prohibition covers any offer, promise, authorization, or payment of money or anything of value to any person, while “knowing” that all or part of it will be passed directly or indirectly to a foreign official to influence official action, induce unlawful omissions, or secure an improper business advantage.

Accounting and Internal Controls Requirements

Companies with securities listed in the United States must comply with the FCPA’s accounting provisions (15 U.S.C. § 78m), which require issuers to:

1. Maintain accurate books and records that fairly reflect all corporate transactions; and
2. Implement adequate internal accounting controls sufficient to assure proper authorization and documentation of transactions.

The SEC and DOJ jointly enforce the FCPA. Penalties can include:

• Civil and criminal fines (up to twice the benefit sought)
• Corporate criminal resolutions
• Individual criminal liability
• Imprisonment of up to five years

DOJ Announces Safe Harbor for M&A Self-Disclosures

On October 4, 2025, Deputy Attorney General Lisa O. Monaco announced a new Department-wide Safe Harbor Policy for voluntary self-disclosures of criminal misconduct uncovered during mergers and acquisitions.

Her remarks highlighted the DOJ’s evolving view of corporate crime and its impact on national security, including:

• Terrorist financing
• Sanctions evasion
• Export-control violations
• Cyber and cryptocurrency-based misconduct
• Intellectual property theft
• Supply-chain and critical-technology risks

The DOJ emphasized its expectation that companies implement strong compliance programs, incorporate compliance metrics into compensation systems, and invest in the internal controls necessary to detect and mitigate risk.

What the New Safe Harbor Provides

For the first time, the DOJ will offer a presumption of declination meaning the DOJ will decline to prosecute, when an acquiring company:

• Voluntarily discloses criminal misconduct discovered during M&A;
• Does so promptly and within the Safe Harbor period;
• Fully cooperates with the ensuing investigation; and
• Conducts timely and appropriate remediation, restitution, and disgorgement.

Importantly:

• Aggravating factors at the acquired company (e.g., involvement of senior management, pervasive misconduct, significant profits from wrongdoing) will not disqualify the acquiring company from receiving a declination.
• This is a significant shift intended to encourage early detection and remediation during the M&A process.

Under the DOJ’s prior FCPA Corporate Enforcement Policy, a “declination” is defined as:

A case that would have been prosecuted or criminally resolved except for the company’s voluntary disclosure, full cooperation, remediation, and payment of disgorgement, forfeiture, and/or restitution.

The new Safe Harbor extends this presumption across all DOJ components, making it easier for acquiring companies to resolve inherited misconduct without facing corporate criminal charges.

Why This Matters for Companies Engaged in M&A

The Safe Harbor underscores the importance of:

• Robust pre-acquisition due diligence
• Immediate post-acquisition audits
• Clear compliance integration procedures
• Forensic review of books, records, and internal controls
• Rapid escalation and legal analysis of potential FCPA issues

Companies that proactively disclose in good faith may avoid:

• Criminal prosecution
• Corporate monitors
• Heavily punitive settlements
• Multi-year compliance obligations

Good compliance programs are no longer seen as a “cost center”, the DOJ reiterates they are a strategic asset that can protect companies from massive legal exposure.

Need Legal Guidance on FCPA Compliance or Self-Disclosure?

The attorneys at Corporate Securities Legal LLP advise domestic and international companies on: M&A due diligence and post-closing review, voluntary disclosures to the DOJ and SEC, corporate governance and remediation plans, risk assessments and compliance program enhancements

Our team is prepared to help you meet all deadlines, documentation requirements, and strategic considerations necessary to receive Safe Harbor protection.