Will FCPA Bank Regulation Be Less Stringent Under Trump?

In his first weeks in office, U.S. President Donald Trump has made moves to begin rolling back Obama-era regulations enacted in the wake of the 2008 financial crisis, such as the Foreign Corrupt Practices Act (FCPA).

“Financial Services Advisor” asks:

During his campaign, now-U.S. President Donald Trump repeatedly said he wanted to reduce regulations on businesses, including those on banks. In 2012, he specifically mentioned the Foreign Corrupt Practices Act, calling it a “horrible law,” and saying that its enforcement has been “absolutely crazy.” What does Trump’s presidency mean for the FCPA and for banks and companies that do business in Latin America and the Caribbean? Is enforcement of the FCPA likely to become less of a priority under Trump than it was under his predecessor, Barack Obama? What will Trump’s presidency mean for the de-risking practices that banks have conducted through terminating relationships with some clients over fears of U.S. fines and other enforcement consequences?

Diaz, Reus & Targ LLP attorneys Louis Martinez and Roland Potts respond:

“To date, many commentators have reached the conclusion that the Trump administration will take a more lax approach to the enforcement of the Foreign Corrupt Practices Act (FCPA). In turn, many have opined that this will allow banks to maintain relationships that would otherwise be purged through de-risking practices. At first glance, there is support for these opinions. After all, President Trump’s first few days in office have been filled with a multitude of executive orders aimed at fulfilling several of his campaign promises.

“As part of his initial salvo, President Trump met with many business executives and has stated that his office intends to reduce regulation of businesses by as much as 75 percent. To support him in that goal, he nominated Jeff Sessions for attorney general and Jay Clayton as chairman of the U.S. Securities and Exchange Commission, both of whom appear in favor of reducing FCPA enforcement.

“However, we caution companies and individuals that assume as fait accompli that President Trump’s desire to reduce regulation will actually result in less enforcement of the FCPA. Those who make that assumption may suffer severe consequences if they are wrong. While it seems President Trump is determined to bring his new form of politics to the fore, he will still have to go through Congress to pass legislation that would have any lasting effect on the FCPA.

“Absent a change in law, any executive order limiting prosecution of FCPA claims can be just as easily washed away with a new administration. Additionally, with many FCPA investigations taking three to five years to settle, those entities currently under investigation are unlikely to see an immediate reprieve. Finally, at this stage, it is too early to tell whether President Trump will use the FCPA as a way to even the playing field for American businesses. Without a change in the law itself, banks and companies that do business in Latin America and in the Caribbean must a take a very conservative approach when considering changes to their current policies.”

To read more Financial Services Advisor Q&A on this topic, download PDF here.

 

 

 

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