In 1998 the United States Congress and 33 other countries acted against the bribery of foreign officials, essentially government officials in an attempt to reduce corruption and money laundering through the global financial system. Corrupt political officials and those in high army office were targeted with a view to preventing government officials from exploiting their positions to gain unfair commercial advantage. The FCPA has and will continue to have a profound impact on the way US firms undertake business in at home and abroad.
Financial institutions are the most impacted group under the legislation as they are required to meet stringent requirements relating to the use of the global financial system by criminals. Essentially financial institutions must show that they have robust controls in place to understand their customers. Due diligence of both customer and transaction is a requirement of the Act and particular care must be taken with Politically Exposed Persons (PEPs). Financial firms must be comfortable with the clients they are dealing with, but beyond that they must be in a position to prove to regulators that they have undertaken the necessary level of due diligence and care when transacting business on behalf of customers.