Extraterritorial Application Of US And UK/EU Law - A Threat Also For Swiss Companies?

Author:Mr Peter Henschel
Profession:MME Legal | Tax | Compliance
 
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  1. BACKGROUND

    Swiss export-oriented companies are facing an increase in regulatory challenges. They have to comply with local and target market regulations, but may also face a potential relevancy of US and EU law. This even though the US or EU may not be directly involved in the companies activities.

    The reason for this is the extraterritorial character of certain US and EU regulations. Swiss companies may not realize they are operating under US and EU jurisdiction albeit the fact that there may only a very limited connection to US or EU.

    An extraterritorial application of US and EU regulations can be seen especially in the area of anti-corruption as well as trade regulations. In both areas the fines for violations can be significant. Enforcement agencies have targeted companies and individuals all over the world.

  2. US AND UK ANTI-CORRUPTION REGULATIONS

    1. Extraterritorial Application of the US Foreign Corrupt Practices Act (FCPA)

      The US has established a quite powerful Anti Corruption Regulation following the OCED guidelines (OECD Anti-Bribery Convention). The FCPA addresses the accounting transparency requirements under the Securities Exchange act and the bribe of officials.

      Example: The US Department of Justice (DOJ) fined Alstom Network Schweiz AG as well as other Alstom companies for corruption in several countries. In this case a Swiss company have been fined for violations of US law in a third country. The extraterritorial enforcement is usually based on the fact that (a) US resources have been used (US Dollars, US financial sys-tem, mail/email) or (b) US persons or companies have been involved.

      Following this logic several non-US companies around the globe have been fined for infringements of the US FCPA. A few weeks ago the Dutch communication company VimpelCom has been fined 795mUSD for the bribe of officials in Uzbekistan.

    2. Extraterritorial application of the UK Bribery Act (UKBA)

      The UK is the most active EU Member State in regards to combatting corruption. The UKBA has an even wider scope com-pared to the US FCPA. The UKBA does not only target the bribe of officials but any kind of bribe.

      Also the UKBA has an extraterritorial character. The necessary ties to the UK are already established with having a single UK customer relation or any business activity in UK. Due to the fact that the UKBA is a rather new regulation not many cases have become public so far. However, it has to be assumed that the UK Serious Fraud Office (SFO)...

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