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Regulatory: Minimizing the FCPA risk associated with third party agents

Due diligence can help minimize some of the compliance risk inherent in working with third parties

Third party agents and consultants present some of the most dangerous pitfalls for companies looking to minimize their FCPA and anti-corruption risk. When companies conduct business through an agent, the companies relinquish a certain degree of control over their processes, and lose some measure of transparency in their anti-corruption compliance program. In spite of these process and program limitations, the FCPA and other anti-corruption laws may still hold a company liable for corrupt payments made on its behalf, even though the company has a diminished ability to police such corruption.

Whether or not there is an increased risk, there are many circumstances where working through a third party or other consultant makes sense from a business perspective. Third parties may have a particular expertise or knowledge that the company lacks, or they may have legitimate access to decision makers. In some parts of the world, working through an agent is the only means by which to do business. Companies must therefore do what they can to minimize the risk inherent with ceding some control over their potential liability to a third party.

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Robertson Park

Rob Park is a partner in Murphy & McGonigle’s Washington, DC office.  Mr. Park spent 20 years in the Fraud Section of the Criminal Division...

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Contributing Author

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Timothy P. Peterson

Tim Peterson is a partner in Murphy & McGonigle’s Washington, DC office.  Mr. Peterson previously served as Senior Counsel in the SEC’s Division of Enforcement,...

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