Last week the Biden Administration released the United States Strategy on Countering Corruption (the “Strategy”); subtitled “Pursuant To The National Security Study Memorandum On Establishing The Fight Against Corruption as a Core United States National Security Interest”; in response to President Biden’s prior declaration of corruption as a national security issue of the United States. While obviously focused on the US government’s role in leading the fight against corruption, the entire document portends a major sea change in the approach of fighting bribery and corruption, literally on a worldwide basis. For this reason alone, it should be studied by all compliance professionals. Over this 5-part series I will be delving into the Strategy and considering how it will impact the compliance professional.
However, first I have to pay tribute to fellow Houstonian and one of the four original Monkees, Michael Nesmith who died over the weekend. The cultural significance of The Monkees cannot not be overstated. It was television’s answer to The Beatles and the English Invasion. Nesmith was the tall quiet one, who was the best musician of the group, known for his trademark wool cap. With Peter Tork and Davey Jones also gone, only Mickey Dolenz is left. Nesmith chafed under the song writing and live playing restrictions believing that he was a good enough musician to both supply songs and perform them live. He was right on both scores. But Nesmith was a creative phenomenon, presaging country rock in an early band, creating the first music video and receiving the first Grammy for video. He also wrote Different Drummer, made a hit by Linda Ronstadt. Rock and Roll Heaven got another great over the weekend.
Back to the Strategy, which has five pillars (conveniently designed for a 5-part series). Pillar 1 is Modernizing, Coordinating, and Resourcing U.S. Government Efforts to Fight Corruption, with  five strategic objectives (1) to enhance corruption related research, data collection, and analysis; (2) improve information sharing within the U.S. Government, with non-U.S.-Governmental entities, and internationally; (3) increase focus on the transnational dimensions of corruption; (4) organize and resource the fight against corruption, at home and abroad; and (5) integrate an anti-corruption focus into regional, thematic, and sectoral priorities.
Obviously, this more holistic approach is most welcomed. Corruption does more than simply steal money from the world economy. According to the Strategy, “Corruption robs citizens of equal access to vital services, denying the right to quality healthcare, public safety, and education. It degrades the business environment, subverts economic opportunity, and exacerbates inequality. It often contributes to human rights violations and abuses, and can drive migration. As a fundamental threat to the rule of law, corruption hollows out institutions, corrodes public trust, and fuels popular cynicism toward effective, accountable governance.” I would add several others such damaging the fight against climate change, destroying ethic business practices and, of course, leading to transnational crime and terrorism.
All of this means more information and analysis, including search and data collection, by using “information more effectively to understand and map corruption networks and related proceeds, and dynamics, and tailor prevention and enforcement related actions, as well as build the evidence base around effective assistance approaches.” The next improved information sharing within the US government, private companies and across international boundaries. It also includes holding corruption actors accountable, curbing illicit financing and bolstering international cooperation and actions.
Another key area will be the increased focus on the “transnational dimensions of corruption.” This means more than simply looking at the usual geographic areas recognized as high-risks of corruption by tackling transnational organized crime through “understanding and disrupting networks, tracking flows of money and other assets, and improving information and intelligence sharing across U.S. departments and agencies, and, as appropriate, with international and non-governmental partners.”
However, the Strategy makes it clear that there is an important US domestic component as “Law enforcement will be provided with the independence and resources necessary to investigate and prosecute domestic crimes involving abuses of the public trust. The Administration will advocate for greater transparency in the U.S. campaign finance system, and to strengthen prohibitions on foreign nationals attempting to influence federal, state, or local elections.” To help in this effort the Department of Treasury will establish an “Anti-Corruption team to develop and support the implementation of current and new initiatives to address corruption and corrupting influence on the U.S. economy.” This group will look at such apparently disparate areas as “financial crimes and financial intelligence, economic sanctions, financial transparency policy, criminal tax investigations, tax policy, and international finance.”
In addition to the Department of Treasury, the US Agency for International Development (USAID) will also develop an Anti-Corruption Task Force to help develop ABC programs and partnerships, look at ABC policy and improvements; promote ABC across foreign sectors and consider resources. Financial Crimes Enforcement Network FinCEN will continue to play a key role in building out an ultimate beneficial ownership (UBO) data system for not only law enforcement but the Financial Action Task Force (FATF) to help “identify, investigate, and take enforcement actions against fraud, money laundering, terrorist financing, and proliferation financing.”
In Pillar 1 the government will merge all these efforts into “regional, thematic and sectorial priorities”. So not only will the usual suspects be targeted, both regionally and by industry, but areas such as response to climate change, response to the Covid-19 pandemic and overall infrastructure. Note, references were made several times to non-government actors, which includes US private and public sector entities. Strategic Objective 1.5 will allow pivoting when new issues, challenges and risks arise, such as Covid-19 and the variants from over the past several months.
Finally, in Pillar 1 you begin to see the overall outlines of this new US government approach. No longer will the effort to fight corruption be led by the Department of Justice (DOJ), Securities and Exchange Commission (SEC) through enforcement of the Foreign Corrupt Practices Act (FCPA). Now a much wider and broader swath of the US government will be involved in the overall effort.
Join us tomorrow where we pay honor to Anne Rice and consider Pillar 2 – Curbing Illicit Financing.