U.S. Laws Abroad

In addition to laws in the host country, some U.S. laws govern the conduct of activities in foreign countries. The following information is intended to highlight some of the more significant laws that you need to consider when conducting an activity abroad.

Foreign Corrupt Practices Act (FCPA)

  • Prohibits directly or indirectly paying or offering to pay money or anything of value to a foreign official to obtain an improper advantage in securing or retaining business.
  • Prohibits inducing a foreign official through an offer, payment, promise or gift to misuse his/her official position in order to obtain preferential legislation or favorable regulation.
    • Exceptions include payment to a foreign official for the purpose of obtaining the performance of a “routine governmental action” (facilitation payment).
      • Applies only to low-level, non-discretionary governmental actions, such as issuing a license or visa.
  • Enforcement is handled by the U.S. Department of Justice (DOJ), who broadly interprets “anything of value,” and “foreign official.”
    • Anything of value may include use of materials, facilities or equipment, entertainment, meals, lodging and transportation.
    • Foreign official includes employees of state-owned or controlled entities such as hospitals, laboratories and businesses.

Violations of the FCPA can result in serious criminal penalties against the individual who made the unlawful payment or gift and the entity on whose behalf such payment or gift was made. All international financial transactions should be well-documented to demonstrate they are lawful and authentic.

Anti-Boycott Laws

The Export Administration Act (EAA) prohibits U.S. individuals and entities from participating in a boycott that is not approved or sanctioned by the government. The Department of Commerce (DoC) punishes violations through the 1976 Tax Reform Act by denying tax benefits. The purpose of these prohibitions is to prevent U.S. organizations and entities from being used to implement foreign policies that run counter to U.S. policy. The DoC regulations prohibit the following agreements or actions:

  • refusal to do business with/in Israel or with blacklisted companies
  • furnishing information about business relationships with or in Israel or with blacklisted companies
  • discriminating against other persons on the basis of race, religion, sex, national origin or nationality
  • furnishing information about the race, religion, sex or national origin of another person
  • implementing letters of credit containing prohibited boycott terms or conditions

The Treasury Department publishes a quarterly list of “boycotting countries.” Past lists have included: Lebanon, Libya, Qatar, Saudi Arabia, Syria, United Arab Emirates, Yemen and Iraq. Additional information can be found through the Office of Anti-Boycott Compliance.

Additionally, it is important to know that:

  • IRS regulations require U.S. taxpayers to report services performed in, with, or related to a boycotting country or its nationals, whether or not they are for-profit.
  • Violations of any of the reporting requirements or anti-boycott laws can result in significant fines, administrative sanctions and potentially imprisonment.
  • If you are planning to conduct any activities or transact business in one of the countries on the Treasury Department list, you should contact the Office of the General Counsel.

U.S. Economic Sanctions

Office of Foreign Assets Control (OFAC)

OFAC administers and enforces economic and trade sanctions to protect against threats to national security, foreign policy or the economy. Sanctions may be comprehensive embargoes, which prohibit most activities with the embargoed country, or targeted sanctions that ban specific activities with or within a given country. They include:

  • targeted foreign countries and regimes
  • terrorists
  • international narcotics traffickers
  • those engaged in activities related to the proliferation of weapons of mass destruction

OFAC also prohibits certain transactions or dealings with persons or entities designated as “Specially Designated Nationals” (SDNs). The SDN website provides a list that must be routinely checked against any contemplated transactions, such as:

  • entering into an international research collaboration or agreement
  • retaining the services of foreign entities or individuals
  • entering into transactions with or within a foreign country

Transactions or dealings include any service, payment, or agreement for a payment regardless of the amount. Violations of these sanctions may result in civil or criminal penalties.

Bureau of Industry and Security (BIS)

BIS maintains separate lists of individuals and entities with which one may not engage. These lists should be routinely checked before entering into business transactions with a foreign person or entity. You can find more information on the BIS website about the following lists:

  • denied Persons
  • entity
  • unverified
  • debarred Parties
  • nonproliferation sanctions

Other Financial Controls

  • Money-laundering
    • Concealing the identity, source or destination of money for illegally obtained money.
  • Support to Foreign Terrorist Organizations (FTOs)
    • Knowingly providing “material support or resources” to any foreign organizations that engage in or threaten to engage in terrorist activity that threatens the security of the U.S. or its citizens.
      • Includes “any property, tangible or intangible, or service, training, expert advice or assistance, personnel and transportation, except medicine or religious materials.”
    • The US State Department maintains a current list of FTOs on its website.

Currency & Foreign Bank Account Reporting

It is important to familiarize yourself with the rules regarding the import and export of currency in your destination country. Many have restrictions on the amount of currency or other monetary instruments that can be exported and most have some form of currency-reporting requirements. In the United States:

  • There is no restriction on the amount of currency or monetary instruments that can be exported or imported, but amounts over $10,000 must be reported to U.S. Customs and Border Protection.
    • Reports must be made on the Treasury Department’s Financial Crimes Enforcement Network Form 105.
    • When returning to the U.S. with an excess of $10,000 in cash, you must disclose the currency on the Customs Declaration Form 6059B, routinely given to arriving passengers.
    • Anyone with a financial interest in or signatory authority over a financial account in a foreign country, where accounts exceed $10,000 at any point during a calendar year, is required to report on the Treasury Form TD F 90-22.1.

Structuring cash transactions or the transportation of currency in such a way as to avoid the reporting requirements is prohibited under U.S. law and by most other countries.

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