ECONOMIC CRIMES: LEGAL FRAMEWORK

Financing terrorism

1. 1. International law
      Financing terrorism is not considered a core international crime, but several international instruments combat and criminalize such conduct.¹ Most notable is the 1999 International Convention for the Suppression of the Financing of Terrorism (ICSFT), which 189 states have ratified. The ICSFT was adopted in the wake of 9/11 to prevent and counteract the financing of terrorists through groups claiming to have charitable, social or cultural goals or that engage in “ordinary” transnational criminal activities such as drug or weapons trafficking.
      Article 2(1) provides for an independent offence of terrorist financing, rather than a secondary participation in terrorism. This is important because, legally, secondary participation requires too close a link to specific acts of terrorism to be established. The policy justification is that financing terrorist acts is as serious as the terrorist acts themselves.
      The offence of financing terrorism applies regardless of whether or not the terrorist act, for which the funds were provided, is ultimately carried out.² The ICSFT criminalizes the act of, “directly or indirectly, unlawfully and wilfully, provid[ing] or collect[ing] funds with the intention that they should be used or in the knowledge that they are to be used, in full or in part, in order to carry out:
      1. An act which constitutes an offence within the scope of and as defined in one of the treaties listed in the annex³; or
      2. Any other act intended to cause death or serious bodily injury to a civilian, or to any other person not taking an active part in the hostilities in a situation of armed conflict, when the purpose of such act, by its nature or context, is to intimidate a population, or to compel a government or an international organization to do or to abstain from doing any act.”In light of this and parallel initiatives of the international community, many states have introduced legislation that criminalizes the act of financing terrorism and can result in individual or corporate criminal liability.
   2. Domestic law

Canada
Canada’s criminal code defines terrorist financing on the basis of key international conventions. Under section 83.01, the following misconduct amounts to terrorist activity: 

1. 1. • • an act or omission that is committed in or outside Canada and that, if committed in Canada, is an offence established by the nine international conventions on terrorist acts and the ICSFT; or
        • an act or omission, in or outside Canada, that is committed in whole or in part for a political, religious, or ideological purpose, cause or objective… to intimidate the public… or to compel a person, a government, or a domestic or an international organization to do or to refrain from doing something. The act or omission must intentionally cause a person’s death or serious bodily harm, or endanger someone’s life, or endanger health or safety of the public, or cause substantial damage to property, or seriously interfere with or disrupt an essential service, facility or system.

France
Under France’s criminal code, financing a terrorist organization is prohibited and itself constitutes an act of terrorism (article 421-2-2). Such financing involves supplying, collecting, managing or directing funds, securities or other goods with the intention or understanding or knowledge that such supplies will be used, in full or in part, to commit a terrorist act, irrespective of whether such an act takes place. In addition, financial and trade sanctions may be imposed against an individual or a legal person whose acts of terrorist financing violate UN Security Council resolutions and EU regulations.⁴ 

Hong Kong (China)
Under the UN Anti-Terrorism Measures Ordinance (UNATMO) Cap 575⁵, it is a criminal offence for a person to:

1. 1. • provide or collect property with intention or knowing or having reasonable grounds to believe that the property, in whole or in part will be used to commit a terrorist act (section 7); or
      • make property or financial services available to or for the benefit of a terrorist or a terrorist associate (section 8).

These offences are punishable by up to 14 years in prison and a fine. 

Cap 575 also authorizes Hong Kong’s Secretary for Security to freeze the property of terrorists or people connected with a terrorist group (section 6). 

Switzerland
Switzerland’s criminal code defines the crime of terrorist financing as the act of collecting or providing funds with a view to financing a terrorist act (article 260). 

A terrorist act is defined as a violent crime intended to intimidate the public or coerce a state or international organization to carry out or not carry out an act. It is punishable by up to five years’ imprisonment or a fine. 

The Swiss Federal Act on Combating Money Laundering and Terrorist Financing supplements criminal law with preventive obligations.

USA
The act of financing terrorism can give rise to criminal liability under the US Code of Crimes and Criminal Procedure (USC), and can result in financial or trade sanctions under various federal laws.⁶ 

Under USC Title 18, a person can be found criminally liable for providing material support or resources to terrorists or designated foreign terrorist organizations, via funds, other property or services.⁷ 

For alleged terrorists, the prosecution must show that the accused provided support or resources to a terrorist while knowing or intending that such support will be used in, or help conceal the preparation for, or carrying out, a federal crime of terrorism.

For designated foreign terrorist organizations, the prosecution must show that the accused knowingly provided or attempted to provide material support to a foreign terrorist organization that they knew had previously engaged in terrorist activity or had been designated by the US State Department as a foreign terrorist organization.⁸

Financing international crimes

War crimes 
An individual or a legal person who financially supports an armed group involved in warfare activities, might also be found liable for complicity in war crimes, if the armed group receiving the support commits grave or serious violations of international humanitarian law during an armed conflict.⁹ 

See Killing, Torture, Rape & sexual violence, Seizure of natural resources as war crimes.

See Complicity in war crimes.

Crimes against humanity
Similarly, an individual or a legal person who financially supports an organization that commits crimes against humanity might also be found liable for complicity in such crimes if the recipient organization commits actions that amount to crimes against humanity.¹⁰

See Killing, Torture, Rape & sexual violence, Seizure of natural resources as war crimes.

See Complicity in crimes against humanity.

Money laundering

Money laundering involves processing criminal proceeds to disguise their illegal origin, thereby legalizing them. It is a unique crime as it occurs after another offence¹¹. The crime of money laundering is a relatively recent development in domestic and transnational criminal legislation. Some of the new normative frameworks cover money laundering and bribery, including some that prohibit activities that used to be considered regular business practice.

1. International law
   In the past 25 years, the international community has adopted numerous international and regional instruments calling on states to criminalize money laundering¹², and many international norms have emerged, including “soft law” standards elaborated within the confines of the Financial Action Task Force (FATF).¹³
   Article 6(1)(a) of the UN Convention against Transnational Organized Crime sets out a widely accepted definition of money laundering as:
   1. “The conversion or transfer of property, knowing that such property is the proceeds of crime, for the purpose of concealing or disguising the illicit origin of the property or of helping any person who is involved in the commission of the predicate offence to evade the legal consequences of his or her action;
   2. “The concealment or disguise of the true nature, source, location, disposition, movement or ownership of or rights with respect to property, knowing that such property is the proceeds of crime…”

   Therefore, the crime of money laundering is established if three elements are present and can be proved, namely:

   1. placing illicit funds generated through criminal activities in the licit financial system via, for example, conversion or transfer; 
   2. disguising the illicit origins of the proceeds once they are placed into the financial system via, for example, concealing the source, location, movement or ownership of the proceeds; and
   3. integrating via acquisition, possession or use the illicit property despite knowing its true nature and source.

   Financial institutions are frequently involved in laundering illicit proceeds, a systemic issue that has led individual states to introduce legislation imposing criminal liability for legal persons. International instruments also call on states to introduce criminal liability not only against individuals but also against legal persons engaging in money laundering activities.¹⁴ Such liability can arise if act of money laundering was committed by a natural person acting either individually or as part of an organ of a corporation, who has a leading position within the corporate entity.¹⁵ If criminal liability is not an option, civil or administrative liability can be imposed against a corporation instead. 

   Indeed, regardless of the circumstances, states are obliged to impose effective, proportionate and dissuasive penalties for money laundering.¹⁶

2. Domestic law

China
Money laundering is a criminal offence under article 191 of China’s criminal code. To establish a crime of money laundering, the prosecutor must prove that: 

• there are proceeds generated from predicate offences; and 
• the accused has acted to disguise or conceal the source nature of such proceeds. 

Predicate offences connected to money laundering refer to criminal activities related to drugs, organized crime, terrorism, smuggling, corruption, bribery, disruption of the financial regulatory order, and financial fraud.¹⁷ 

To be convicted of money laundering, the offender must have been involved with at least one of the following acts:¹⁸

• making bank accounts available;
• helping exchange property into cash or any financial negotiable instruments;
• helping transfer capital through transferring accounts or any other form of settlement;
• helping remit funds to any other country; 
• covering up or concealing by any other means the nature or source of the illegally
• obtained proceeds and the gains derived from them.

In terms of penalties:

• For an individual, the penalty is 10 years’ imprisonment and/or a fine without an upper limit, in addition to confiscation of the illegal proceeds and gains. 
• For a legal person, the maximum penalty is a fine without an upper limit in addition to confiscation of the illegal proceeds and gains, with directly responsible personnel subject to 10 years’ imprisonment and/or a fine without an upper limit, in addition to the confiscation of the illegal proceeds and gains.

 
France
Under article 324-1 of France’s criminal code, money laundering is defined as facilitating by any means the false origin of property or income, or of the perpetrator of a felony or misdemeanour that has brought the accused direct or indirect benefit; or assisting in investing, concealing or converting the direct or indirect products of a felony or misdemeanour. 

Financial and trade sanctions against offenders may be imposed in accordance with UN Security Council resolutions and EU regulations. In addition, the offender may be held criminally liable. 

The Netherlands 
Dutch law sets out a regulatory regime for money laundering that provides for sanctions set by EU regulations and the UN Security Council.¹⁹ 

In tandem with the regulatory acts, the Netherlands’ criminal code criminalizes the act of money laundering, which is punishable by imprisonment or a fine (sections 23(7) and 420). 

The criminal code has two offences on money laundering that are identical with one exception. The first requires the accused to know that the object in question derived directly or indirectly from a serious offence (article 420bis). The second requires only that the accused had reasonable cause to suspect that that object derived directly or indirectly from a serious offence (article 420quarter). In both, the offence is committed by someone who has acquired, transferred, converted or possessed an illicit object or hidden or concealed the real source, location or identity of the owner of the object.

United Kingdom
The Proceeds of Crime Act 2002 (POCA) and The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (the Regulations) are the principal laws used to prosecute money laundering in the United Kingdom (UK). 

Other relevant laws are the Terrorism Act 2000, which contains offences relating to terrorist financing; and the Sanctions and Anti-Money Laundering Act 2018, which was designed to ease the UK’s departure from the EU and ensure it maintained existing regulations and continued to comply with the international standards and recommendations made by the FATF. The Sanctions and Anti-Money Laundering Act also enables the UK to create its own national sanctions framework.

The POCA has three main money laundering offences: 

• concealing, disguising, converting, transferring or removing criminal property from the UK; 
• entering into, or becoming involved in an arrangement, knowing or suspecting that it facilitates the acquisition, retention, use or control of criminal property by or on behalf of another person; and
• acquiring, using or possessing criminal property.

Underlying each money laundering offence is the concept of “criminal property” (the proceeds of crime). The prosecution must prove that the property in question is criminal property in relation to every money laundering offence. The POCA defines criminal property as property that constitutes a person’s benefit from criminal conduct, or represents such a benefit, in whole or in part and whether directly or indirectly. 

The POCA defines “criminal conduct” as any conduct that constitutes an offence in the UK, or would constitute an offence in the UK if it had occurred there (section 340). It is immaterial who carried out the crime, who benefited from it or whether the underlying offence happened before the POCA came into force. The accused must also have known or suspected that the property was criminal property. 

Under English law, criminal liability attaches to both legal and natural persons. Therefore, a corporate entity may be held criminally liable for money laundering under the “identification principle”. This requires the identification of a person or persons representing the “controlling mind and will” within the corporation who are sufficiently senior and have sufficient control such that their acts are attributable to the company itself. 

USA 
In the USA, a natural or legal person can be held criminally liable for money laundering or can be financially penalized through executive orders and regulations. 

The USC identifies money laundering on the basis of whether the crime is domestic or has international elements. However, the only difference is that the second case covers the transfer, transport or transmission of funds from abroad in the USA or vice versa. 

The crime of domestic money laundering is established if it is proved that the defendant: 

• conducted or attempted to conduct a financial transaction involving proceeds of specified unlawful activity; or transported, transferred or attempted to transfer funds to or from the USA; and
• intended to promote the unlawful activity and evade taxes or knew that the transaction was designed to disguise the true nature, source, location or ownership of the illicit property.²⁰

Dealing in illegally obtained goods 

Domestic law

France 
France’s criminal code criminalizes receiving goods obtained by a felony or misdemeanour (article 321(1))(“recel”).²¹ 

“Receiving” is defined as the concealment, retention or transfer of a thing, or acting as an intermediary in its transfer, knowing that it was obtained by a felony or misdemeanour. “Receiving” may also be the act of knowingly benefiting from the product of a felony or misdemeanour. 

Individuals or corporations whose trading partners have been sanctioned for involvement in criminal activities or human rights violations – by the UN, the EU or a state – can face criminal prosecution for receiving and/or benefiting from illicit goods. A conviction may result in imprisonment and/or a fine (article 321(1-4)).

Legal persons may incur criminal liability if an offence has been committed on their account by organs or representatives of the corporation in question (article 121(2)). When a corporation is found liable for complicity in international crimes, the penalties to be incurred by such legal entity include (under articles 213(3) and 131-139): 

• dissolution of the corporation;
• a ban on exercising directly or indirectly certain social or professional activities, either permanently or for a maximum of five years;
• permanent closure or closure for up to five years of the corporation; 
• judicial supervision for up to five years;
• disqualification from public tenders; and
• confiscation of some or all of their assets. 

The Netherlands 
In the Netherlands, a set of laws (domestic and EU harmonization legislation) regulates the trading of strategic goods.²² In addition, articles 1-4 of the Economic Offences Act (EOA) complements the Dutch criminal code and provide for possible criminal sanctions if one violates certain regulatory requirements imposed by a variety of laws, such as custom or sanction laws. A violation of the EOA can give rise to criminal liability, which may result in imprisonment and/or a fine (articles 5-16). Corporate liability can also arise under articles 5-16, with penalties that include: 

• cessation of the company’s activities;
• placing the company in administration;
• confiscation of company property; 
• total or partial denial of certain rights or advantages, such as participating in public tenders; and
• selling stocks.

Corruption and bribery

1. Definitions
   Corruption
   Corruption can take many forms. It includes behaviour such as public servants demanding or accepting money or favours in exchange for services; politicians misusing public money or granting public sector jobs or contracts to their sponsors, friends and families; and corporations bribing officials to win lucrative deals. There is no universally agreed definition of the crime of corruption. Civil society organizations and EU institutions often define it as “the abuse of (entrusted) power for private gain”.²³ The World Bank Group defines it more narrowly as “abuse of public office for private gain”. However, all expert definitions include the elements of: 
   • abuse (misuse, violation) of an entrusted power (duty, office, etc.); and 
   • a private benefit.²⁴ 

   Corruption occurs in both the public and private sectors. Private corruption is commonly defined as the abuse of professional obligations within a corporation or other non-governmental entities for private gain, such as when a company employee sells commercial secrets to a rival company. 

   The following crimes also fall under the notion of abuse of entrusted powers for a private gain. 

   Bribery
   Bribery corresponds to the offer or exchange of money, services or other valuables to influence the judgement or conduct of a person in a position of entrusted power. The benefit does not need to go to the official in question directly – it can, for example, go to a relative or friend, or to the official’s political party as a donation. 

   A bribe is sometimes paid after the fact – for instance, in monthly instalments to the official issuing a permit. This form of bribery is called a kickback. 

   States widely criminalize bribery, and punish both the party promising or paying (“active bribery”) and the party receiving the bribe (“passive bribery”). 

   Domestic bribery refers to the bribery of domestic public officials. 

   International bribery involves the act of promising or giving a bribe to public officials of a foreign country or of an intergovernmental organization, and the act of soliciting or receiving a bribe by a foreign public official or an official of an intergovernmental organization.

   Embezzlement
   Embezzlement is the misappropriation of property or funds legally entrusted to someone in their formal position as an agent or guardian, such as accountants and financial managers. Other forms of embezzlement include taking supplies, equipment and so on.

   Trading in influence 
   Trading in influence (also known as influence peddling) occurs when a person who has a real or apparent influence on the decision-making of a public official exerts their influence in exchange for an undue advantage. The offence is similar to bribery but concerns the intermediary between the decision-maker and the party that seeks an improper advantage. The decision-maker may not even be aware of the illicit exchange.

   Corruption, development and human rights
   Corruption is in many ways one of the most significant forms of economic crime. By illegally diverting state funds, public corruption especially undercuts key public services, such as health, education, public transportation or local policing.²⁵ Petty corruption has additional costs for citizens: it worsens service provision, and “payment” is required for even the most basic government activity, such as issuing official documentation. High risks of corruption can reduce investment in a country’s economy with many long-term effects, including social polarization, human rights abuses, undemocratic practices and diversion of funds intended for development and essential services.²⁶ Indeed, the harmful effects of corruption on human rights are particularly severe on poor, vulnerable and marginalized people.²⁷

   Development
   Corruption obstructs sustainable development in all its dimensions,²⁸ as it stops public resources being used to promote socio-economic rights, such as the rights to an adequate standard of living, education or health. 

   The UN 2030 Agenda for Sustainable Development urges states to “substantially reduce corruption and bribery in all their forms” and to return all stolen assets by 2030.²⁹ UN treaty bodies have “identified mismanagement of resources and corruption as obstacles to the allocation of resources to promote equal rights”.³⁰ Corruption can also jeopardize the health and safety of citizens through, for example, poorly designed infrastructure projects or obsolete medical supplies. 

   Human rights
   Countries with high rates of corruption tend to be those with poor human rights records.³¹ For example, judicial corruption limits the right to a fair trial and can encourage illegal detention and torture. 

   Indeed, the UN Human Rights Council has emphasized that all forms of corruption can have a serious negative impact on human rights. In several resolutions,³² it has stressed a preventive approach to corruption with a focus on: 

   • safeguarding the human rights of vulnerable persons;
   • ensuring a safe and enabling environment for civil society; 
   • providing anti-corruption education; and
   • fostering cooperation between national anti-corruption authorities and national human rights institutions.

   However, neither international human rights treaties nor international anti-corruption treaties explicitly define corruption as a violation of human rights,³³ although interpretations of these legally binding instruments and international human rights standards increasingly link corruption to human rights.³⁴
   

   International treaties
   While bribery and other forms of corruption have been proscribed by many states for decades, the fight against corruption at the international level only started in the late 1990s, notably with the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (1997 OECD Convention). The following 25 years have seen unprecedented international initiatives aimed at combating corrupt practices. Most importantly, many countries have adopted domestic laws and regulations to implement the 1997 OECD Convention and five other key international anti-corruption treaties.³⁵

   UN Convention against Corruption
   Among the key treaties is the 2003 United Nations Convention against Corruption (UNCAC). This covers a wide range of topics – from prevention to civil and criminal liability – and defines various criminal offences including illicit enrichment, trading in influence, embezzlement and abuse of functions. 

   As with most international anti-corruption treaties, the UNCAC focuses on bribery, both domestic and international. For example:

   • Article 15 requires states parties to adopt legislative and other measures necessary to establish offences relating to the bribery of public officials. 
   • Article 16(1) requires states parties to criminalize the bribery of foreign public officials and officials of public international organizations. 
   • Article 21 requires states parties to consider criminalizing the intentional commission of “the promise, offering or giving” and “the solicitation or acceptance” of an undue advantage “in the course of economic, financial or commercial activities”, although the provision is not mandatory. 
   • Article 22 urges states parties to consider criminalizing embezzlement of property in the private sector.

   Furthermore, the UNCAC:

   • Introduced a novel asset recovery mechanism designed for the restitution of assets. 
   • Enumerates a wide range of preventive measures directed at both the public and private sectors. 
   • Urges states to set up national anti-corruption bodies, strengthen the integrity of the judiciary and reinforce their public procurement systems. 
   • Requires states parties to adopt a comprehensive regulatory regime for banks and other financial institutions and designated people, such as lawyers, certified public accountants, notaries and real estate agents, to prevent money laundering. 
   • Urges states to promote the active participation of civil society in the prevention of corruption. 

   Most international anti-corruption treaties require states to hold legal persons, including corporate entities, liable for corruption offences and cover civil, criminal and administrative liability. Furthermore, all international anti-corruption treaties contain detailed provisions relating to domestic and extraterritorial jurisdiction, international cooperation in criminal matters and mutual legal assistance.
   

2. Domestic law
   China
   Bribery of public officials is regulated under China’s criminal code. Under articles 389, 390, 390A and 393, “bribery” means giving money or property to an incumbent or former public official, or a person closely related to the incumbent or former public official, to secure illegitimate benefits. “Public official” refers to personnel performing public service in state organs, as well as the following:
   
   • personnel engaged in public service in state-owned corporations, enterprises, institutions and social organizations; 
   • personnel assigned to non-state-owned corporations, enterprises, institutions and social organizations by state-owned corporations, enterprises and institutions; and
   • other personnel engaged in public service in accordance with the law.

   Individuals, companies or legal entities convicted of bribery are punishable by up to life imprisonment and confiscation of criminal proceeds. Public officials who receive substantial bribes can be sentenced to death. 

   Companies that offer bribes to public officials or people related to public officials, as well as the people who are directly in charge of those companies and directly responsible for such offences, are subject to:
   

   • a fine levied on the company; 
   • up to five years’ imprisonment and a fine for the people offering bribes to public officials; 
   • up to three years’ imprisonment and a fine for people offering bribes to former public officials or people related to public officials.

   Under article 164, “corruption of foreign public officials” means giving money or property to foreign government functionary or officials of international public organizations for the purpose of seeking improper commercial interests. The sanctions are:
   

   • for individuals, up to 10 years’ imprisonment and a fine;
   • for legal entities, a fine, as well as up to 10 years’ imprisonment and a fine for the people directly in charge and other people who are directly responsible for the offence.

   Private bribery is regulated by the criminal code and China’s Anti-Unfair Competition Law. Under article 164 of the criminal code, “private bribery” means giving money or property to any employee of a company, enterprise or other entity for the purpose of seeking improper interests and benefits. Under article 8 of the Anti-Unfair Competition Law, “private bribery” means giving money or property, or secret and off-the-book kickbacks to a business counterparty or its employee, or using other means to bribe a business counterparty or its employee for selling or purchasing goods. 

   France
   In recent years, France has made numerous efforts to strengthen anti-corruption enforcement with a significant increase in the number of prosecutions for corruption offences and the introduction of new laws. 

   The 2016 Sapin II Law aimed to align French anti-corruption law with aspects of US and UK practices, and reinforced anti-corruption compliance landscape for large French companies.³⁶ 

   France’s criminal code criminalizes both active and passive corruption of domestic officials (articles 432(11) and 433). Corruption is defined as the act of soliciting or agreeing to a bribe to induce a public official to act or refrain from acting in relation to the performance of their duties, function or mandate. The offence is committed by the act of soliciting or agreeing to a bribe regardless of whether the bribe is actually paid or the official performs the requested act.
   

   Corruption can be committed indirectly through intermediaries such as agents, consulting firms, distributors or a subsidiary. In such cases, both the person commissioning the bribe and the intermediary will be held liable for corruption, either jointly or as accomplices.³⁷ 

   The criminal code also makes it a criminal offence to solicit or agree to a bribe. In addition, abuse of influence with a view to granting distinctions, employment, contracts or any other favourable decision from a public authority or the government is also a criminal offence (article 433(1)).

   Corruption of public officials and abuse of influence are punishable by:

   • for individuals, up to 10 years in prison and a fine of up to EUR 1 million, which can be increased to twice the value of the assets to which the offence relates; 
   • for legal entities, a fine of up to EUR 5 million, which can be increased by up to 10 times the value of the assets to which the offence relates (articles 432(11) and 431(1)). 

   Private corruption is punishable by:

   • for individuals, up to five years in prison and a fine of up to EUR 500,000, which can be increased to twice the value of the assets to which the offence relates; and
   • for legal entities, a fine of up to EUR 2.5 million, which can be increased by up to 10 times the value of the assets to which the offence relates.

   Ancillary penalties, such as confiscation of the proceeds of the crime, confiscation of all property whose legal origin cannot be demonstrated, and disbarment from public procurement, can also be imposed (article 445(1)).

   Finally, corporations may incur criminal liability for acts of corruption committed by management bodies (boards of directors), legal representatives (senior managers such as directors and CEOs) or employees given a specific power to represent the company, whenever they are acting on the corporation’s behalf, even if they are breaching corporate policy.

   Italy
   Italian criminal law covers most offences contained in international anti-corruption treaties.³⁸

   Articles 317-322 of Italy’s criminal code criminalize domestic active and passive bribery of public officials envisaged by the international anti-bribery treaties. 

   Article 322bis criminalizes bribery of: 

   • foreign public officials in international business transactions; 
   • officials of international public organizations; and
   • EU officials. 

   “Public officials” and “people in charge of a public office” (articles 357 and 358) cover the categories referred to in the relevant treaty provisions. Moreover, Italian jurisprudence interprets “public function” to the widest possible extent and may also include employees of public enterprises and companies that have been granted licences to perform public services.³⁹

   For bribery between private persons, Legislative Decree No. 38/2017 extended the reach of private commercial bribery by implementing the EU Framework Decision 2003/568/JHA on combating corruption in the private sector. In addition, Law No. 3/2019 amended Italy’s civil code by introducing the possibility of prosecuting private-to-private corruption and incitement of private-to-private corruption (article 2635). 

   Corruption is generally regarded as a serious offence with correspondingly proportionate punishment, aggravating circumstances and possible additional sanctions such as disqualification. 

   USA
   The USA has long been a front-runner in its efforts to combat bribery and corruption, both domestically and extraterritorially. There are countless examples of investigations and prosecutions of US public officials and those involved in corrupting them.⁴⁰

   The legislative framework for combating corruption and related enforcement efforts exists at the local, state and federal levels. However, the federal government, particularly the Department of Justice and the Federal Bureau of Investigation (FBI), have special roles in addressing public corruption and have at their disposal a wide variety of federal public corruption offences. These range from a broad federal bribery and gratuity statute (18 USC section 201) to more focused legislation such as the Foreign Corrupt Practices Act of 1977 (FCPA).

   18 USC 
   The primary statute that expressly criminalizes corruption of US federal public officials is 18 USC section 201. Section 201(b) criminalizes bribery and section 201(c) prohibits the payment or receipt of gratuities. 

   A gratuities conviction only requires that the thing of value be knowingly or wilfully offered or given “for or because of any official act”, rather than corruptly to influence the official act. In terms of receiving bribes, the Hobbs Act (section 1951) also targets public corruption by criminalizing extortion under colour of official right.

   No federal statute specifically proscribes private commercial bribery, but federal prosecutors can resort to several laws. For example, the mail and wire fraud statutes extend liability to “a scheme or artifice to deprive another of the intangible right to honest services” (section 1346), and have been used to prosecute employees of private companies who receive or pay bribes.⁴¹

   With respect to international business, US federal prosecutors have relied on the Travel Act (section 1952) to prosecute commercial bribery. 

   In terms of penalties:
   

   • For individuals convicted under section 201 of bribery, both the payer and the recipient of the bribe may be punished by up to 15 years’ imprisonment or a fine of up to USD 250,000 or both, or triple the value of the bribe, whichever is greater (sections 201(b) and 3571(b)). 
   • Violations of the gratuities provisions are punishable by up to two years’ imprisonment and a fine of USD 250,000 (sections 201(c) and 3571).
   • A violation of section 666, which covers theft or bribery concerning programmes receiving federal funds, carries a maximum penalty of 10 years’ imprisonment and a fine of USD 250,000. 
   • A Hobbs Act violation is punishable by up to 20 years’ imprisonment and a fine of up to USD 250,000. 
   • A violation of the Travel Act (based on bribery conduct) is punishable by up to five years’ imprisonment and a fine of the greater of: (i) USD 250,000 or (ii) twice the economic gain or loss.

   The FCPA
   The FCPA prohibits payments made directly or indirectly to “any foreign official” or “any foreign political party or candidate thereof, or any candidate for foreign political office”. 

   USC Chapter 15 (15 USC), section 78dd, defines a foreign official as any “officer or employee of a foreign government or any department, agency, or instrumentality thereof, or of a public international organization, or any person acting in an official capacity for or on behalf of such government or department, agency, or instrumentality, or for or on behalf of any such public international organization”. Public international organizations include any entity designated as such by executive order of the US President (such as the UN).⁴²

   In general, the Department of Justice and the Securities and Exchange Commission (SEC) regard officers and employees of corporations and other business entities that are wholly or primarily owned or controlled by a foreign government as government officials for the purposes of the FCPA. In countries where government-owned or controlled enterprises account for substantial economic activity (such as China), a large number of individuals holding business positions are treated as “foreign officials” for FCPA purposes. 

   Consultants and advisers that have been retained by foreign government agencies to assist with official functions are also typically considered to be foreign officials, as are members of royal families and certain traditional and tribal leaders, depending on the circumstances.

   Both companies and individuals can face liability for violations of the FCPA. The FCPA’s jurisdiction extends to “issuers”, “domestic concerns” and, in some circumstances, foreign nationals or businesses. 

   An “issuer” is a corporation that has issued securities registered in the USA or is required to make periodic reports to the SEC. A “domestic concern” is any individual who is a citizen, national or resident of the USA, or any business entity with its principal place of business in the USA or is organized under the laws of any US state. 

   US issuers and US persons may be held liable for any act that assists a corrupt payment, regardless of any connection to the territory of the USA or US interstate commerce. Jurisdiction will apply with respect to foreign issuers and non-citizen US residents if they make use of the US mail or US interstate commerce to assist a corrupt payment.
   

   A foreign national or company is criminally liable if it causes an act that assists a corrupt payment in US territory. US parent companies can also be held liable for the acts of their foreign subsidiaries if they authorized, directed or controlled the activity in question.

   In terms of penalties: 

   • Companies that violate FCPA provisions may be fined the greater of: (i) USD 2 million per violation or (ii) twice the gain or loss resulting from the improper payment. 
   • Individuals who violate the anti-bribery provisions are subject to penalties of the greater of: (i) USD 250,000 per violation or (ii) twice the gain or loss resulting from the improper payment and may also face up to five years’ imprisonment.

   The FCPA’s anti-bribery provisions provide that the Department of Justice or the SEC may impose civil penalties not greater than USD 10,000 per violation. The Department of Justice pursues criminal prosecutions while the SEC frequently uses other civil enforcement powers available to it. 

   Any entity found to have violated the FCPA’s anti-bribery provisions may also be barred from US government contracting. Even an indictment may render an entity ineligible to sell goods or services to the US government. 

   A finding that an entity has violated the FCPA can also have negative collateral consequences in other dealings with US government agencies.