In December 2021, the White House released the “United States Strategy on Countering Corruption” (the “Strategy”). The Strategy is a follow-on document to the June 3, 2021, Memorandum on Establishing the Fight Against Corruption; (See our prior Alert regarding corruption as national security priority), which set Administration policies regarding the corrosive impact of corruption globally and directed key agencies and departments to develop strategies to attack corruption.
The Strategy outlines five pillars and related strategic objectives to combat corruption. The pillars seek to: (1) prioritize and fund combatting corruption by using data analysis to understand and map corruption networks and related proceeds; (2) enhance anti-money laundering efforts; (3) implement strong enforcement measures to hold corrupt actors accountable; (4) strengthen multilateral anti-corruption framework; and (5) use foreign assistance as a “carrot and stick” to advance anti-corruption policy objectives. Across each pillar, the Administration will consult and cooperate with foreign partners, including key internal constituents; prioritize efforts to reduce corruption as a national security concern across policy-making processes and by elevating and engaging in bilateral and multilateral engagements; and will seek to continuously assess, refine and improve its approach to minimize risk, respond to challenges and capitalize on opportunities disrupt corrupt activities.
Some key features of the Strategy are discussed below:
1. Administration to Develop New Methods to Fight Corruption. The Strategy reiterates that corruption is a global problem that harms civil societies and pose a national security threat to the United States. The Administration’s increased information sharing among task forces within the Department of Commerce, USAID, Department of State, and Department of Treasury, coupled with the Administration’s harnessing data analytics to identify corrupt networks and track proceeds will likely yield increased enforcement actions.
2. Curb Illicit Finance and Focus on Gatekeepers. The Administration plans to attack “money laundering, illicit trafficking, and other forms of criminal activity that fuel corruption.” The Strategy is focused on beneficial ownership interests that may be shrouded by opaque corporate structures which weak corporate governance. The Administration will focus on corrupt activity by investment advisors, private equity funds, and real estate transactions. Additionally, gatekeepers to the financial system (lawyers, accountants, trust and company service providers) who help clients evade scrutiny will receive increased attention, and due to challenges to prove intent, the Administration plans to collaborate with Congress to consider whether to expand criminal law to ensure gatekeepers are covered by the U.S. anti-money laundering regime.
3. Accountability For Corrupt Actors. The Strategy reiterates comments by Deputy Attorney General Lisa Monaco and Principal Associate Deputy Attorney General John Carlin regarding holding bad actors accountable, and coupled with additional technology and prosecutorial tools, more enforcement actions against corrupt actors is expected. In particular, we anticipate increased investigations and prosecutions under the Foreign Corrupt Practices Act aimed at each side of bribery transactions. Similarly, the Treasury Department has piloted a Kleptocracy Asset Recovery Rewards Program to identify and recover stolen assets linked to foreign governments that reside in U.S. financial institutions, creating an expectation of potentially more whistleblower actions.
4. Cryptocurrency and Corruption. The Administration will continue to prioritize reviews of cryptocurrency transactions as a tool to facilitate criminal conduct. The DOJ’s National Cryptocurrency Enforcement Team will focus on complex investigations related to criminal misuses of cryptocurrency, particularly by virtual currency exchanges, mixing and tumbling services, and money laundering.
5. Focus Attention on Certain Regions. The Strategy plans to integrate anticorruption considerations into its action plans so that it filters down to prioritize countries with high incidence of corruption. The Strategy does not identify which regions or countries are covered. However, we anticipate the Administration’s focus will be on certain countries in Central and South America, Africa, Asia, and Middle East.
6. Bolster Multilateral Frameworks. The Strategy abandons the “go it alone” mindset and reverts to international cooperation. The Administration will continue to provide financial support, intelligence, and expertise to bolster international anti-corruption organizations and will encourage foreign partners to fulfill anti-corruption mandates. The Administration proposes to work diligently to defend against attempts to weaken global anti-corruption norms and frameworks, such as the UN Convention Against Corruption, the OECD Anti-Bribery Convention, and FATA, and will aggressively work to disrupt safe havens for corrupt actors (presumably including havens within U.S. borders).
7. Carrots and Sticks. The Administration will use foreign assistance, including security sector assistance, multinational lending, foreign assistance and diplomatic engagement to help certain countries strengthen their legal regimes, foster ethical behavior, enforce anti-corruption measures, and develop countermeasures to “strategic corruption.” The Administration is particularly focused on protecting anti-corruption activists, developing oversight capabilities to fight corruption among foreign partners, and partnering with governments to offer consistency and risk analysis across its foreign assistance programs. For national security purposes, the Administration will seek to integrate anti-corruption considerations into military planning, analysis and operations and develop new protocols for assessing corruption risk.
Bradford Edwards & Varlack LLP is following the Strategy rollout closely and is ready to advise clients on its implications for their operations as well as to aid with enterprise risk assessments to address areas of concern. As a policy, we recommend a robust compliance program as a bulwark against corruption and the associated risks of government enforcement action.
 The SEC’s implementation of data analytics into its enforcement program (beginning in or about 2013) has yielded significant results. We anticipate that data analytics will yield similar results here too in the coming years. [back]