United States: FCPA Exposure for Grantmakers

For U.S. foundations and grantmaking intermediaries, the relevant law is the Foreign Corrupt Practices Act (FCPA). Its anti-bribery provisions prohibit any “domestic concern” from corruptly giving anything of value to a foreign official in order to obtain or retain business, and the statute defines a domestic concern broadly enough to cover any U.S. organization, nonprofit or for-profit [2]. The Department of Justice has addressed this directly, holding in two Opinion Procedure Releases that U.S. nonprofits making cross-border grants are subject to the anti-bribery provisions [3][4].

Being covered by the FCPA is not the same as being at risk under it. The statute reaches payments made to obtain or retain business, and DOJ has not treated that element as automatic for nonprofits. A company donating to a charity chaired by the official who decides whether it wins a government contract plainly has that motive. A foundation funding a rural clinic does not. Either way, the practical question is the same: did anyone check, before the grant went out, whether the grantee’s leadership includes a government official?

How aggressively the FCPA is enforced has varied considerably from one administration to the next. What it prohibits has not changed, and that is the more reliable guide to how much diligence a grant deserves [5].

Canada: Documentation-Driven Due Diligence

Canada doesn’t have a law aimed specifically at charitable payments to foreign officials, but its general foreign-bribery statute isn’t confined to for-profit conduct. The Corruption of Foreign Public Officials Act covers advantages given to a foreign public official in the course of business, and in 2013 Parliament deleted the words “for profit” from the Act’s definition of “business” for the express purpose of extending it to non-profits and charities [6]. No charity appears to have been prosecuted under the Act, so the risk is untested rather than nonexistent.

Day to day, Canadian charities operate under the Income Tax Act’s “qualifying disbursement” rules, which require that a grant to a foreign or other non-qualified recipient further the charity’s own charitable purpose, and that the charity keep documentation showing the money was actually used that way [7]. The CRA’s guidance on this, CG-032, lays out a practical model: assess each grant’s risk as low, medium, or high, then apply a proportionate set of accountability tools, ranging from basic research on the grantee to a full written agreement and independent fund tracking [7].

CRA’s risk factors don’t include the political connections of a grantee’s leadership. Where government does appear in that list, it lowers the risk score rather than raising it: a grantee supervised by a foreign government regulator is treated as lower risk than one that isn’t. CG-032 does not mention PEP screening anywhere. But it does say its list of tools is not exhaustive, and the first of them, research and review, covers a grantee’s staff and the individuals associated with it. That is where PEP screening fits for a Canadian funder, particularly on a large grant or one that may be re-granted onward.

European Union: A Binding Rule, but for Banks

The EU’s approach is the most explicit of the five, on paper. Existing anti-money-laundering law requires banks and other regulated financial businesses to determine whether a customer or beneficial owner is a PEP, and to apply enhanced scrutiny, senior management sign-off, verification of both source of wealth and source of funds, and ongoing monitoring when there’s a match [8]. A new, stronger version of this rule, the 2024 EU AML Regulation, applies EU-wide from 10 July 2027 and widens the definition to reach regional and local officials representing constituencies of 50,000 or more [8]. As written, the duty binds banks and similar institutions, not grantmaking foundations. The practical effect for a European funder is the reverse of what it might expect: the foundation is the customer, so the people a bank runs against PEP lists are its own officers and board members, not its grantees. Nothing in EU law asks the foundation to run that same check downstream.

United Kingdom: Trustee Duties, Not a PEP Mandate

UK charities operate under two different sets of expectations that are easy to conflate. The Charity Commission’s guidance sets out “know your donor,” “know your beneficiaries,” and “know your partner” principles, expecting trustees to take reasonable steps to understand who they’re dealing with, especially in higher-risk countries, as part of their general legal duty of care [9]. The same guidance flags possible involvement with politically exposed persons as one indicator that the risk of abuse may be greater, though it raises this when assessing a partner organisation abroad rather than a donor, and treats it as a risk factor rather than a screening requirement [9]. Separately, UK tax law requires charities sending money abroad to take reasonable steps, to HMRC’s satisfaction, to ensure it’s used for charitable purposes [10]. The UK’s Money Laundering Regulations do include an explicit PEP screening duty, but it applies only to a defined list of regulated businesses, banks, accountants, lawyers, and similar, not to charities [11]. So while UK charities are expected to know their donors and grantees well, and PEP screening is a sensible way to do that, it isn’t a legal requirement imposed on charities by name.

Australia: Reformed Rules That Mostly Don’t Reach Charities

Australia’s PEP rules live in its Anti-Money Laundering and Counter-Terrorism Financing Act, overhauled by rules that took effect on 31 March 2026 [12]. The Act requires regulated “reporting entities” to check whether a customer is a foreign, domestic, or international-organization PEP, and requires enhanced scrutiny automatically for foreign PEPs [13]. Charities and grantmaking foundations generally aren’t reporting entities under this Act, and AUSTRAC, Australia’s financial intelligence unit, has said directly that most non-profits fall outside its coverage [14]. What does bind Australian charities operating internationally are separate standards from the charity regulator, requiring reasonable controls over money sent abroad and reasonable steps to guard against corruption involving overseas partners [15]. PEP screening is one sensible way to meet that standard, even though it isn’t named in the rule itself.

The Real Pattern Across All Five

None of these five frameworks hands grantmakers a simple, uniform legal mandate to run PEP screening. Two of them, the US and Canada, don’t mention PEPs in the grantmaking context at all. The other three have real, binding PEP rules, but those rules are aimed at banks and similar regulated businesses, not at foundations. What actually is consistent across every jurisdiction is a broader expectation that funders operating internationally know who they’re dealing with, document that inquiry, and scale their scrutiny to risk. PEP screening is one of the clearest, most defensible ways to meet that expectation, particularly for large grants, grants that may be re-granted onward, or grants into sectors where government officials commonly exert influence.

Putting Screening Into Practice

Given that landscape, PEP screening works best as one part of a broader, risk-calibrated due-diligence process rather than as a standalone legal checkbox. It pairs naturally with adverse media checks, sanctions screening, and a look at a grantee’s governance structure. It’s most clearly worth doing where a specific concern exists, a government official sits on a grantee’s board, the grant touches a sector prone to official influence, or funds may flow onward to sub-recipients that haven’t been vetted. Good screening combines automated database checks against PEP and sanctions lists with human review to sort out false matches, since automated tools alone tend to flag a lot of false positives once names are translated or transliterated. The resulting documentation gives a grant file a clear, defensible record of the questions a funder actually asked: who leads this organization, what public roles do they or their close relations hold, and when was that checked.

Conclusion

A U.S. grantmaker’s FCPA exposure is real, confirmed by DOJ’s own guidance, and doesn’t depend on PEP screening being legally required. Canada’s and the UK’s due-diligence rules genuinely apply to grantmakers without naming PEP screening as the method. The EU’s and Australia’s PEP rules are real and binding, but currently reach regulated businesses rather than charities. Across all five, the takeaway is the same: funders who build PEP screening into a documented, risk-based due-diligence process are in a stronger position than those who treat it as either a legal formality or an unnecessary extra step, regardless of which country’s rules apply to a given grant.