A grease payment and a bribe look similar from the outside: money changes hands, a foreign official acts, business moves forward. U.S. law separates them by asking one question. Did the official have any choice about what to do? If the payment only speeds up something the official was already required to do, the Foreign Corrupt Practices Act treats it as a lawful facilitating payment. If it asks the official to exercise judgment in your favor, to overlook a rule, or to award you something they didn’t have to, it’s a bribe, and the penalties run into millions of dollars and years in prison. That is the entire distinction between grease payments and bribes under the FCPA, and it is narrower than most people assume.
What the FCPA Actually Permits
The statute lists what counts as a “routine governmental action.” Under 15 U.S.C. § 78dd-1(f)(3), the exception covers tasks a foreign official ordinarily performs, such as processing permits and licenses, handling visas and work orders, providing police protection or mail delivery, scheduling inspections tied to contract performance or the transit of goods, connecting phone, power, or water service, loading and unloading cargo, and similar routine tasks.
Then the statute cuts a hole through the middle of that list. “Routine governmental action” does not include any decision about whether to award or continue business with a particular party.1Legal Information Institute. 15 U.S. Code 78dd-1 – Definition: Routine Governmental Action That’s the boundary. A payment to a clerk to stamp an already-approved visa faster can qualify. A payment to a procurement officer to steer a contract your way never will.
Where the Line Moves in Practice
The distinction turns on discretion. A facilitating payment compensates an official for doing something they were already obligated to do, only faster. The official has no authority to deny the underlying action; only the timing is in play. A bribe asks the official to exercise judgment, to look the other way, or to do something they have no duty to do at all.
The line is thinner than it reads. A $50 payment to a customs clerk to move your shipment to the top of a processing queue looks like a facilitating payment. A $5,000 payment to the same clerk to overlook a documentation problem is a bribe. What about $500 to a clerk who hints your paperwork might get “lost” without it? That starts to resemble extortion, and the FCPA’s exception doesn’t clearly protect payments made under that kind of pressure. Enforcement agencies scrutinize the size of the payment, the seniority of the official, and whether the underlying action truly required no discretion.
Penalties When a Payment Doesn’t Qualify
If the payment falls outside the exception, it’s a bribe. Under 15 U.S.C. § 78ff, a company that violates the anti-bribery provisions faces criminal fines of up to $2 million per violation. Individual officers, directors, employees, or agents face up to $100,000 in criminal fines and up to five years in prison per violation.2Office of the Law Revision Counsel. 15 U.S. Code 78ff – Penalties The statute also prohibits the company from paying the individual’s fine on their behalf, so personal exposure is real.
Civil penalties add another layer. The SEC can bring an action seeking up to $10,000 per violation against both the company and individual employees.2Office of the Law Revision Counsel. 15 U.S. Code 78ff – Penalties Actual penalties in enforcement actions routinely exceed these statutory floors through disgorgement of profits and settlement agreements. The DOJ and SEC have extracted hundreds of millions of dollars in a single case when bribery was systematic.
The Books-and-Records Trap
Even a payment that genuinely qualifies as a facilitating payment can become a crime if it’s written up dishonestly. Every company that files with the SEC must keep records that “accurately and fairly reflect the transactions and dispositions of the assets of the issuer” and must maintain internal accounting controls sufficient to ensure transactions are properly authorized and recorded.3Office of the Law Revision Counsel. 15 U.S. Code 78m – Periodical and Other Reports
Companies making facilitating payments sometimes bury them in the ledger as “consulting fees,” “miscellaneous expenses,” or “local service charges.” That mischaracterization violates the books-and-records requirement regardless of whether the underlying payment was legal. A payment that would have been perfectly lawful becomes an accounting violation the moment it’s recorded dishonestly. The statute specifically prohibits any person from knowingly falsifying books, records, or accounts, or from knowingly circumventing internal accounting controls.4Securities and Exchange Commission. Recordkeeping and Internal Controls Provisions
Tax Consequences
The Internal Revenue Code adds another wrinkle. Under 26 U.S.C. § 162(c)(1), payments to foreign government officials that violate the FCPA cannot be deducted as business expenses. The statute denies any deduction for a payment made “directly or indirectly, to an official or employee of any government” if the payment is unlawful under the FCPA.5Office of the Law Revision Counsel. 26 U.S. Code 162 – Trade or Business Expenses
Facilitating payments that fall within the exception are not unlawful under the FCPA, so in principle they remain deductible as ordinary business expenses. The burden of proving that a payment violates the FCPA falls on the IRS, not on the taxpayer. A company claiming the deduction should keep contemporaneous documentation showing the payment was small, went to a low-level official, and was made solely to speed up a routine action. Without that documentation, the company invites both a tax dispute and closer attention from enforcement agencies.
The FCPA Exception Doesn’t Travel
Even if a payment is safe under U.S. law, it may not be safe anywhere else your company operates. The United Kingdom’s Bribery Act 2010 covers all forms of bribery and makes no exception for facilitating payments. An individual convicted under the Act faces up to 10 years in prison, and fines are unlimited on indictment.6UK Government. Bribery Act 2010 Explanatory Notes Companies face unlimited fines as well, and the Act creates a separate offense for commercial organizations that fail to prevent bribery by people acting on their behalf.
Canada eliminated its facilitating payments defense through the Fighting Corruption Act, with the change taking full effect on October 31, 2017. Since that date, facilitating payments are illegal under Canadian law regardless of where they occur. France and Japan similarly prohibit all such payments. Australia is one of the few countries that still allows a defense, but only if the payment was minor in value, was made solely to expedite a routine government action, and was promptly recorded in the company’s books.7Parliament of Australia. The Facilitation Payment Defence – Senate Economics Committee A U.S. company with UK operations gains nothing from the FCPA exception when the same payment exposes it to prosecution in London.
Why Many Companies Just Ban Them
A growing number of multinational companies have adopted zero-tolerance policies that prohibit all facilitating payments, technical FCPA exception or not. Maintaining two compliance standards for different jurisdictions is expensive and error-prone; a blanket ban is cheaper than teaching every employee where the FCPA line runs and hoping they get it right under pressure.
The classification problem drives most of it. In the field, employees rarely have time to consult lawyers about whether a particular payment meets every element of the definition. The line between speeding up a routine action and inducing a favorable decision is genuinely unclear when an official is signaling that paperwork will be delayed indefinitely without payment. A blanket ban removes the judgment call and the risk that a well-intentioned employee inadvertently commits a crime. For most large companies, the modest operational benefit of being allowed to make small payments to foreign officials is not worth the compliance cost or the reputational exposure that comes with defending the practice.