How to Measure The Effectiveness of Your FCPA Compliance Program

The DOJ has repeatedly made it clear that companies must assess the effectiveness of their FCPA compliance programs in practice. The message is obvious: no matter how detailed your risk mitigation and anti-corruption strategies may be, it’s the outcomes of those strategies that you will be judged on.

Companies are well-versed in being able to demonstrate where their program has not been effective – the existence of substantiated investigations is an obvious example.

However, the goal now is to measure effectiveness, not ineffectiveness. With that in mind, how can you begin to validate the overall effectiveness of your program? The answer lies within the application of forensic data analytics.

 What Is FCPA Compliance and Why It’s Critical

FCPA compliance refers to an organization’s adherence to the Foreign Corrupt Practices Act (FCPA)—a U.S. law that combats corruption and promotes transparency in international business dealings. The FCPA contains two core components: the anti-bribery provisions, which prohibit offering or giving anything of value to foreign officials to obtain or retain business, and the accounting provisions, which require accurate financial recordkeeping and robust internal controls.

The law applies broadly—not just to U.S. companies, but also to foreign subsidiaries, agents, and joint venture partners that are owned or controlled by U.S. entities or listed on U.S. stock exchanges. Even third parties acting on behalf of a company, such as consultants or contractors, can create liability under the FCPA if they engage in corrupt practices.

But compliance isn’t just about avoiding legal penalties—it’s about building a culture of integrity. Ethical conduct is at the heart of effective FCPA compliance. Organizations that prioritize transparency and accountability reduce their risk of enforcement and foster long-term trust with customers, investors, and regulators alike.

Key Provisions of the Foreign Corrupt Practices Act (FCPA)

The FCPA is structured around two key areas of enforcement.

1. Anti-Bribery Provision

The anti-bribery provision makes it unlawful for companies or individuals to offer, promise, or give anything of value, directly or indirectly, to a foreign government official in order to influence a decision, secure an improper advantage, or retain business. This includes not only cash payments but also gifts, travel, entertainment, and charitable donations intended to sway a decision-maker.

Example: A pharmaceutical company pays for a foreign health official’s luxury vacation in exchange for fast-tracking drug approvals. Even if the payment isn’t explicitly linked to the approval, this can still violate the FCPA.

Importantly, the law doesn’t require that a bribe actually be paid; even the mere offer can trigger enforcement action.

2. Books and Records + Internal Control Requirements

The accounting provisions apply to publicly traded companies and require them to:

• Maintain accurate books, records, and accounts that fairly reflect all transactions.
• Implement and maintain a system of internal controls that ensures accountability and prevents unauthorized transactions.

For example, disguising a bribe as a “consulting fee” in financial records would be a direct violation of the FCPA’s books and records requirement. Even unintentional inaccuracies can draw scrutiny from regulators like the U.S. Securities and Exchange Commission (SEC).

Robust internal controls, such as approval workflows, audit trails, and due diligence processes, are essential for detecting and preventing misconduct before it becomes a legal and reputational risk.

The Elements of an Effective Compliance Program

A robust FCPA compliance program is built on several interconnected elements designed to prevent, detect, and respond to misconduct. Each component plays a critical role in reducing bribery and corruption risk:

• Clear Policies and Procedures: Codify expectations for ethical conduct, gift-giving, third-party interactions, and financial controls.
• Leadership and Governance: Strong oversight from senior leadership and compliance officers ensures accountability and sets the right tone across the organization.
• Training and Communication: Regular, role-specific training keeps employees and third parties aware of FCPA risks and how to avoid them.
• Reporting Channels: Anonymous and accessible hotlines or reporting tools empower employees to speak up about potential misconduct.
• Auditing and Monitoring: Periodic reviews of financial transactions, third-party engagements, and high-risk operations help identify red flags early.
• Enforcement and Discipline: Consistent consequences for violations, regardless of role—reinforce the importance of compliance.
• Response and Continuous Improvement: Investigating reports promptly and updating controls based on lessons learned strengthens the program over time.

Together, these elements provide a foundation for measuring the program’s effectiveness, ensuring it’s more than a paper policy.

How to Measure the Elements in Your FCPA Program

To evaluate whether your compliance program is functioning as intended, organizations should apply key performance indicators (KPIs) to each element. These data points can reveal gaps, guide resource allocation, and demonstrate effectiveness to regulators.

Examples include:

• Training: Track completion rates and post-training assessment scores to confirm understanding.
• Reporting: Monitor hotline usage trends (e.g., volume, anonymity rates, resolution times) to assess awareness and trust in the system.
• Audits and Controls: Measure internal control testing results, frequency of testing, and failure remediation timelines.
• Discipline and Response: Review consistency and timeliness of disciplinary actions taken for FCPA violations.
• Leadership Engagement: Track participation in compliance initiatives or executive-level communication promoting ethics.
• Third-Party Risk: Assess the number of due diligence reviews completed, flagged entities, or contracts paused for further review.

Regular analysis of these KPIs ensures your FCPA compliance program is both proactive and data-driven, not just reactive.

Paint a More Accurate Picture with Forensic Data Analytics and Risk-Scoring

The true incidence of non-compliance, and the correlated assessment of your compliance efforts, can be better gleaned by applying forensic data analytics to 100% of your T&E expenses, invoices, rebates, discounts and other transfers of value.

Each transaction, such as a vendor invoice, can be subjected to dozens of statistical, behavioral and rule-based analyses to assign an automated aggregate transactional risk score. Such an approach can escalate to internal compliance, audit and investigations personnel the highest-risk outlier transactions, employees and third parties for further investigation.

Aggregating the analyses to one composite score per transaction is critical, as escalating transactions that matched for a single analysis (e.g., a round dollar payment), can often produce an immense number of false positives, overwhelm reviewers with tedious follow-up, and take the legs out from under a nascent analytics and monitoring program. And tailoring a standard library of analyses to your company’s unique risks and historical issues is essential to making such efforts effective.

How does this relate to the DOJ’s expectations on continuous monitoring?

Continuous transaction monitoring of spend data squarely addresses recent DOJ guidance that companies manage risk across the lifespan of their relationships, particularly with third parties.

A third-party that was designated as low risk during the diligence process may have been misclassified or their scope of work may have changed. Monitoring them through their real-time spend, as opposed to only through periodic diligence refreshes or audits, is the best way to ensure that they are compliant and that your third party risk management program is effective.

Integrating FCPA Compliance into Business Operations

FCPA compliance should be embedded into the fabric of your operations, not treated as a separate, check-the-box exercise. True integration ensures that compliance is aligned with business strategy, risk management, and daily decision-making.

Leadership sets the tone. When executives openly champion ethics, provide compliance resources, and model integrity, it reinforces the importance of doing business the right way. Middle managers play a vital role too, translating high-level expectations into department-level practices.

To embed compliance controls into workflows:

• Include compliance checkpoints in procurement and onboarding processes.
• Require FCPA-related due diligence for all high-risk third-party engagements.
• Automate approval workflows for gifts, travel, or donations.
• Integrate risk flags or alerts into financial systems to prevent improper transactions before they occur.

These practical steps turn FCPA compliance into a living part of your business, not an afterthought.

How Due Diligence Strengthens Your Compliance Program

Third parties—agents, consultants, joint venture partners, and acquisition targets—represent one of the highest FCPA enforcement risks. Even if a bribe is paid by an external partner, your company can still be held liable.

That’s why robust due diligence is a cornerstone of a strong compliance program.

Key red flags to watch for include:

• Lack of transparency about ownership or operations
• Requests for unusually high fees or commissions
• Close relationships with foreign government officials
• Resistance to contract language around compliance

Mergers and acquisitions (M&A) and joint ventures (JVs) present unique challenges. Acquiring a company with a history of corrupt practices can bring serious liability if due diligence isn’t thorough.

Conducting effective global due diligence can be difficult due to:

• Limited access to reliable data in high-risk markets
• Language and cultural barriers
• Variability in local anti-corruption enforcement

Still, these challenges underscore the need for risk-based vetting, standardized review processes, and documentation. When done right, due diligence not only prevents violations—it shows regulators that your compliance program is serious, thoughtful, and continuously evolving.

A Data-Driven Future for Compliance

Compliance officers, regardless of whether or not they are in front of a regulator, are constantly looking for comfort that their programs are effective. Employing advanced data analytics that test your actual transactional data in real time is the most effective way to gain that comfort.

Over the next few years, compliance programs will increasingly transition to a future where compliance officers and their C-suites and Boards can all sleep better on a bed of advanced data analytics.

Frequently Asked Questions

1. What are the 7 elements of an effective compliance program?

The seven elements of an effective compliance program, as recognized by the U.S. Department of Justice and other regulatory bodies, provide a framework for preventing and detecting misconduct:

1. Written Policies and Procedures: Clear guidance on ethical conduct, risk areas, and reporting mechanisms.

2. Program Oversight: Active involvement from senior leadership and a designated compliance officer.

3. Training and Education: Ongoing education tailored to employee roles and risk exposure.

4. Effective Reporting Channels: Confidential avenues for employees to report concerns or violations.

5. Monitoring and Auditing: Regular review of processes and controls to identify potential issues.

6. Enforcement and Discipline: Fair and consistent consequences for non-compliance.

7. Response and Continuous Improvement: Prompt investigation of issues and updates to policies and controls based on lessons learned.

2. What are the hallmarks of an effective FCPA program?

An effective FCPA compliance program goes beyond baseline requirements and demonstrates a deep commitment to anti-corruption principles. Key hallmarks include:

• Leadership commitment (“tone from the top”) to ethical conduct
• Risk-based due diligence on third parties and transactions
• Tailored policies and training that address specific corruption risks
• Robust internal controls to detect and prevent improper payments
• Effective mechanisms for reporting and investigating misconduct
• Consistent enforcement and discipline
• Ongoing monitoring and continuous improvement

These characteristics signal to regulators—and your workforce—that your program is not only well-designed but also actively enforced.

3. What metrics can be used to measure compliance success?

To track the effectiveness of your FCPA compliance efforts, consider using these compliance key performance indicators (KPIs):

• Training completion rates and quiz results
• Volume and trends in hotline reports
• Percentage of third parties vetted through due diligence
• Number of internal audit findings related to FCPA risks
• Time to resolve investigations or policy violations
• Employee survey responses on ethical culture and awareness
• Reduction in repeat violations

These metrics provide insight into program strengths and weaknesses—and support continuous improvement.

4. How often should a compliance program be reviewed?

A best practice is to review your compliance program annually, with more frequent updates when:

• There are significant business changes (e.g., M&A, market expansion)
• You enter new high-risk regions or sectors
• Enforcement trends or regulatory guidance evolve
• A compliance failure or audit finding prompts reassessment

Regular reviews ensure your program stays relevant, risk-based, and effective in a fast-changing global landscape.

5. What are common red flags in FCPA due diligence?

During FCPA due diligence, watch for warning signs that could indicate corruption risk, including:

• Lack of transparency in ownership or operations
• Unusually high commissions, fees, or cash payments
• Refusal to agree to anti-corruption contract clauses
• Close ties to government officials
• Negative media or reputation concerns
• Use of shell companies or intermediaries
• Inconsistent or incomplete documentation

Identifying and investigating these red flags early can help prevent costly violations—and demonstrate to regulators that your program is diligent and risk-aware.