Foreign Companies, U.S. Risk: The False Claims Act Can Be a Global Compliance Risk

The Trump Administration’s Department of Justice (DOJ) has made clear that it will aggressively use the False Claims Act as part of its corporate enforcement program. The message is not subtle. Enforcement actions are accelerating, and the statute’s scope is being leveraged aggressively to advance broader economic, political, and cultural priorities.

Many non-U.S. companies may never have heard of the False Claims Act (FCA), and those who have may assume this U.S. law doesn’t apply to them. But if your company does business with the U.S. government, sells into federally funded programs, moves goods through U.S. ports, or pays U.S. duties, you may be exposed to substantial legal and financial risk in the U.S. under the FCA.

What’s at Stake?

The FCA is a civil, not criminal, statute that imposes liability for knowingly submitting, or causing to be submitted, false or fraudulent claims for payment to the U.S. government, or making false statements that result in false claims being paid. The FCA also prohibits making false statements that lead to an underpayment of monies owed to the government, such as customs duties. The statutory framework includes whistleblower provisions that allow private individuals, including competitors and employees, to file lawsuits on the government’s behalf and to share in the government’s recovery.

In the past year alone, DOJ-initiated FCA investigations nearly tripled. Settlements and judgments under the FCA exceeded $2.9 billion in the 2024 fiscal year. A number of these cases involved international trade and customs practices, including the misclassification of imported goods, incorrect valuation of goods, and failure to properly report country-of-origin information.[i] The risk is particularly acute because many non-U.S. companies do not realize they are operating in a regulatory environment with U.S. criminal and civil liability.

Common Exposure Points for Non-U.S. Companies

For non-U.S. companies, the most common points of exposure to the FCA include:

Contracting directly or indirectly with U.S. federal agencies;
Selling products or services into U.S. government-funded programs;
Engaging in international development projects funded by the U.S. government; and
Participating in U.S. supply chains where foreign companies themselves act as the importers of record or cause someone else to pay the duties, file customs paperwork, or submit pricing certifications.

Examples include incorrect tariff classifications, origin misstatements, underreported entry values, inflated prices relating to U.S. contracts, or failing to meet quality standards promised in a U.S. contract. FCA liability attaches when a false statement is “material” to the government’s payment decision and was made “knowingly” — which includes reckless disregard or deliberate ignorance. We have provided in-depth analysis of these risks in this blog series.

A New Political Overlay: DEI as a Compliance Flashpoint

To mitigate risk in the current environment, non-U.S. companies with FCA exposure also must be aware that the Trump Administration’s focus on diversity, equity, and inclusion (DEI) initiatives may further expand FCA exposure. Executive Order 14173 directs federal agencies to treat compliance with anti-discrimination laws as a material condition of payment under federal contracts and grants. It also requires contractors and grantees to certify that their DEI programs do not violate these laws. If such terms are incorporated into contracts (and the executive order mandates they be included on a going-forward basis) with non-U.S. companies, noncompliance could give rise to FCA liability. Given this, non-U.S. companies should monitor their contract terms closely, review internal DEI practices, and prepare for potential scrutiny in this new enforcement space.

This puts many companies — particularly in Europe — in a legal and operational bind: While they may feel they are required to implement affirmative diversity and inclusion measures under local law, they may now face U.S. enforcement risk if those same programs are seen as violating U.S. anti-discrimination law. The result can be a regulatory “Catch-22,” where compliance with one jurisdiction’s legal mandate may be treated as a violation in another. Global companies must now steer carefully through potentially conflicting legal obligations and heightened scrutiny.

Practical Steps to Mitigate FCA Exposure

If your company’s operations intersect in any way with U.S. government funds, the U.S. government’s funds, or regulatory filings, you should take steps now to get ahead of the risk. Practical recommendations include:

Map your U.S. touchpoints. Understand where and how your company is involved in U.S. government-related transactions, contracts, or import flows.
Validate trade compliance. Ensure robust controls are in place to confirm product classification, country-of-origin reporting, pricing accuracy, and proper use of special trade programs (such as the USMCA).
Audit contract representations. Review the accuracy of all statements made in or related to U.S. government contracts — direct and indirect — and assess such contracts for compliance with U.S. non-discrimination laws.
Train the frontline. Provide compliance training for staff responsible for customs, contracting, or communications with U.S. partners and agencies.
Engage legal counsel early. Don’t wait for a subpoena. Assess exposure proactively, especially in light of whistleblower and the new DEI risks.

Final Thoughts

The Trump Administration’s amplified focus on FCA enforcement represents a significant shift in federal procurement oversight — with far-reaching consequences for entities engaged in U.S. government contracting. Non-U.S. companies should proactively assess their exposure and implement comprehensive compliance strategies to navigate this evolving regulatory landscape.

Summer associate Abby Keilin provided assistance in the composition of this blog post.

If you have questions about this topic, please feel free to reach out to any of the authors or your Foley & Lardner attorney. If you would like to see future updates about operating in today’s complicated international trade world, please sign up for our Tariff & International Trade blog — click here to register.

[i] See Foley & Lardner LLP, The False Claims Act, https://www.foley.com/insights/publications/2019/10/the-false-claims-act/; Foley & Lardner LLP, Multinational Company Risk: Customs False Claims Act Actions Under the Trump Administration, https://www.foley.com/insights/publications/2025/03/multinational-company-risk-customs-false-claims-act-actions-trump-administration/; Foley & Lardner LLP, Multinational Company and the False Claims Act, https://www.foley.com/insights/publications/2024/02/multinational-company-false-claims-act/.

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