Foreign official, until recently, referred to a person who held a political office in a government other than one's own. However, the term has now taken a new meaning due to roles and statuses created by legislation such as the Foreign Corrupt Practices Act

Foreign Corrupt Practices Act

The Foreign Corrupt Practices Act of 1977 is a United States federal law known primarily for two of its main provisions, one that addresses accounting transparency requirements under the Securities Exchange Act of 1934 and another concerning bribery of foreign officials.- Provisions and scope...

 (FCPA). From a business perspective, the need to identify "foreign officials" is critical to the compliance process. If a relationship with a foreign official is not recognised and company funds could intentionally or unintentionally end up in the hands of such a person, the costs of noncompliance with the FCPA may potentially reach into the hundreds of millions of dollars.

US Department of Justice Definition

According to the US Department of Justice, the term "foreign official" is defined as:
The intent of the law is to stop the bribing of foreign officials so that the actual providing of funds to foreign governments directly would not constitute a violation.

The FCPA applies to US companies and foreign organisations or persons doing business within the borders of the United States

United States

The United States of America is a federal constitutional republic comprising fifty states and a federal district...

. This definition also applies to issuers of publicly traded securities (companies traded on US stock exchanges and in other US markets).

United Nations definition

The United Nations

United Nations

The United Nations is an international organization whose stated aims are facilitating cooperation in international law, international security, economic development, social progress, human rights, and achievement of world peace...

 (UN) has also taken a stance on corruption and the Organization for Economic Cooperation and Development (OECD) has defined a foreign official, or foreign public official as the following:
The OECD defines "foreign official" as such:
And expands the definition as such:
The definition of a foreign official defined in the OECD agreement is now referenced in enforcement actions by the United States Department of Justice.

Risks of business with foreign officials

The process of recognising if an entity is doing business with an individual who would be considered a foreign official is not only necessary from a compliance perspective, but also necessary when evaluating the risks in a company's business model. This process can be very simple or may be quite complex depending on how many relationships an entity has in place. The process of identifying foreign officials is typically carried out by the comparisons of client or third-party lists with lists of foreign officials that contain the names and positions of such officials, as well as unique identifiers such as dates of birth, photos, and contact numbers.

The term foreign official should not be confused with the term "politically exposed person

Politically exposed person

PEP is an abbreviation for Politically Exposed Person, a term that describes a person who has been entrusted with a prominent public function, or an individual who is closely related to such a person. The terms PEP, Politically Exposed Person and Senior Foreign Political Figure are often used...

", as this term relates to the financial sector and its clients. The term "foreign official" relates to all industries.