For at least six months, U.S. President Donald Trump has suspended enforcement of the Foreign Corrupt Practices Act (FCPA), the nation's foreign bribery law, and Latin America will be affected.
On February 10, President Trump signed an executive order (E.O.) on "Pausing Foreign Corrupt Practices Act Enforcement to Further American Economic and National Security." The E.O. asserts that "[c]urrent FCPA enforcement impedes the United States' foreign policy objectives" and that "overexpansive and unpredictable FCPA enforcement against American citizens and businesses... actively harms American economic competitiveness and, therefore, national security."
The president has instructed Attorney General (AG) Pam Bondi to refrain from opening new cases, evaluate existing FCPA investigations, and provide updated guidelines for future enforcement. This stance marks a significant policy shift from previous administrations, which viewed corruption prohibited by the FCPA as a threat to U.S. national security.
Many see the FCPA as crucial in influencing anti-corruption enforcement trends and corporate compliance practices across Latin America. Halting FCPA enforcement now could have a disproportionate impact, increasing the risk of bribery in regional businesses.
The FCPA's role in Latin America
Seven major Latin American economies (Argentina, Brazil, Chile, Colombia, Costa Rica, Mexico, and Peru) have strengthened their bribery laws and corporate compliance requirements in connection with their commitments to the OECD Anti-Bribery Convention, which is based on the FCPA. These enhanced legal frameworks have fueled bursts of important anti-corruption activity in the region, including Lava Jato, which is still the largest corruption investigation in history.
The FCPA has driven tight cooperation on evidence gathering and prosecutions over the years between U.S. authorities and their counterparts in Brazil, Colombia, Mexico, Peru, and other important jurisdictions. The FBI set up a bureau in Miami to focus on investigating corruption for a reason -- FCPA enforcement has gained a level of traction in Latin America not seen in other parts of the world.
Important Latin American companies, such as Petrobras, Braskem, Odebrecht, Graña y Montero, LAN Airlines, Embraer, Grupo Aval, SQM, and Cemex, have been subject to FCPA investigation or enforcement in recent years. This is due to their status as publicly traded in the U.S. or the fact that corruption schemes in which they were involved touched the U.S.
Survey data similarly suggests the FCPA has played a key deterrent role for bad conduct in the region. The 2020 and 2024 editions of the Latin America Corruption Survey, performed by law firms throughout the region, found that over 60% of the approximately 1,000 professionals polled said they thought the U.S. would lead regional anti-corruption enforcement over the next three years. In both 2020 and 2024, almost 70% of respondents said they were somewhat or very familiar with the FCPA.
How will the FCPA pause affect Latin America?
It is hard to believe that suspending FCPA enforcement will not have a significant and far-reaching impact on the anti-corruption landscape across the region. Wrongdoers could feel more empowered. Problematic agents, gestores, despachantes, and other facilitators could re-emerge as more frequent participants in local business. Bribe demands from government officials could become more aggressive, and global executives and front-line sales teams might find it increasingly challenging to use the FCPA as a defense against such requests.
This dynamic is aggravated by the fact that bribery and fraud risk already appear to be entrenched, and perhaps even worsening, in Latin America. In last year's Transparency International Corruption Perceptions Index, 14 of 19 Latin American countries surveyed experienced deteriorations in perceived corruption risk, with only four seeing improvements and one experiencing no change. Nearly half of the respondents in the Latin America Corruption Survey said that corruption is a "significant obstacle" to doing business. Complicating the picture, the most recent Capacity to Combat Corruption Index reflects an anti-corruption environment in the region already under strain, with scores showing that critical institutions are having difficulty addressing risk.
What does the FCPA pause mean for companies?
Firms operating in the region will now face a choice. Some may choose to go soft on their corporate anti-corruption compliance programs if the immediate threat of enforcement is not perceived as serious. They could reduce compliance budgets and personnel, apply lighter due diligence when contracting with third-party intermediaries, and look the other way when red flags arise suggesting problematic conduct. They could demand fewer compliance assurances from their partners in the region. Their internal investigations could become less probing.
The more sophisticated companies will not be so shortsighted. Bribery is still illegal, in the U.S. and throughout Latin America. The FCPA, though paused, is still in effect -- the E.O. creates no new legal defenses or exceptions for companies and individuals. The FCPA's statute of limitations is five years from the last action and can be extended, and FCPA cases often take years to investigate, spanning multiple administrations. Any bad conduct that occurs now could easily be subject to enforcement well into the future.
Commercial actors, such as banks, external auditors, customers, and business partners, will continue to demand compliance from their counterparties. Additionally, market participants will require anti-corruption covenants, which have become a standard component of transnational business.
Furthermore, anti-corruption compliance practices are now standard in business operations within the region. Nearly 80% of respondents in the 2024 Latin America Corruption Survey reported that their companies have essential compliance program components, including anti-corruption policies, contractual clauses, training, and guidelines for gifts, travel, and entertainment. Significant local communities of qualified compliance professionals exist in key markets across the region, such as Brazil, Mexico, Colombia, and Chile.
More fundamentally, a growing number of companies throughout Latin America now appreciate that corporate ethics and compliance programs that address anti-corruption are good for business. When done right, these programs help companies know how their money is spent, identify fraud, waste, and abuse in operations, and bolster employee engagement, morale, and recruitment. People want to work for good companies, not bad companies.
Given the heightened corruption risks now at play, companies would be wise to reinforce their internal controls, not loosen them.
Latin America still in play for DOJ enforcement
While FCPA enforcement might be paused, the Trump administration is turning its sights to meaningful enforcement in other areas directly relevant to Latin America. A directive by AG Bondi on her first day in office entitled "Total Elimination of Cartels and Transnational Criminal Organizations" states that DOJ's foreign bribery and money laundering investigations will now focus on facilitation of cartels and Transnational Criminal Organizations (TCOs), indicating a prioritization of Latin American countries where cartels are prevalent. Companies can expect their operations in conflict-affected areas to fall under scrutiny. They should be alert to risks of providing "material support" (defined broadly) to cartels, facilitating money laundering, and inadvertently assisting human smuggling, fentanyl trade, or arms trafficking when operating in challenging areas of Latin America.
These risks are heightened by the fact that President Trump signed an E.O. designating cartels as Foreign Terrorist Organizations (FTOs). The designation stiffens criminal penalties for companies that provide material support to FTOs. It extends restrictions to non-U.S. companies and introduces civil forfeiture as a remedy, allowing the U.S. Government to take title to assets linked to criminal offenses. It also implicates civil liability provisions under the Anti-Terrorism Act, a notable risk given the active plaintiffs' bar of lawyers that look to develop cases against companies allegedly providing material support to FTOs -- prevailing plaintiffs are automatically entitled to treble damages and attorney's fees.
This order recalls the 2007 Chiquita Banana case, in which the company paid millions of U.S. dollars in criminal fines for making protection payments to Colombia's Autodefensas Unidas de Colombia (AUC), an FTO. Given the Trump administration's policy focus on immigration, cartels, and the narco-trade, one can imagine these types of cases becoming much more frequent again.
The Trump administration might also target Chinese entities in the region, creating new risks for U.S. and Latin American companies operating there and interacting with the Chinese. Trump's striking tariff policy could ultimately result in enforcement actions against U.S. importers involved in false country-of-origin reporting and other types of customs fraud to lessen the business impact of tariffs.
All these elements suggest that companies must maintain relevant controls and retool them to address new risks while the FCPA remains on pause.