On December 6, 2021, the Biden-Harris Administration presented the United States Strategy on Countering Corruption (the “Strategy”), a novel and comprehensive document that reinforces and elevates the priority of anti-corruption policy and signals increased enforcement efforts in the coming years. The Strategy declares an ambitious goal of reducing corruption globally and so it is expected that implementation of the Strategy will have an impact on enforcement activities around the world and will enhance cooperation between countries and international organizations. This may also lead to more standardization among various regimes tackling corruption and money laundering.
The Strategy is focused around five mutually-reinforcing pillars to aid with implementation:
1. Modernizing, Coordinating, and Resourcing U.S. Government Efforts to Better Fight Corruption.
This will include law enforcement resources and bolstering information sharing between the intelligence community and law enforcement. Institutional capabilities will be expanded through creation of a new anti-corruption task force at the Department of Commerce, alongside a similar function at USAID and the Department of Treasury.
2. Curbing Illicit Finance.
This pillar emphasizes interconnectedness of corruption and money laundering and focuses on some of the identified weaknesses in the United States financial system. To address this, the following new initiatives will be introduced: (a) increasing corporate transparency through introduction of beneficial ownership data base, to avoid use of shell companies and other opaque legal structure; (b) introducing reporting requirements for certain real estate transactions, to counter the perception of real estate as “a safe way to park value and obfuscate the source of illicit funds”; (c) prescribing reporting requirements for investment advisors and equity funds; and (d) making sure that “gatekeepers” to the financial system, such as lawyers, accountants and company service providers, cannot escape scrutiny.
3. Holding Corrupt Actors Accountable. This stresses vigorous enforcement of foreign bribery cases through FCPA; establishment of a pilot Kleptocracy Asset Recovery Rewards Program, to help to identify and recover stolen assets linked to foreign government corruption; and work with private sector to encourage the adoption and enforcement of anti-corruption compliance programs by U.S. and international companies.
4. Preserving and Strengthening the Multilateral Anti-Corruption Architecture. This pillar is focused on bolstering anti-corruption institutions and implementation of existing frameworks, such as OECD and the United Nations, as well as enhancing multilateral cooperation and assistance.
5. Improving Diplomatic Engagement and Leveraging Foreign Assistance Resources to Advance Policy Objectives This involves elevating corruption as a diplomatic priority, expanding anti-corruption focused U.S. assistance, supporting civil society and investigative journalism.
On a practical level, for private companies across jurisdictions, these developments emphasize the essential nature of effective implementation and evaluation of anti-corruption and anti-money laundering compliance programs. Such programs, when tailored to each company’s risk profile and effectively implemented, serve two main purposes: (a) prevent violations either within the company or when dealing with third parties and (b) provide mitigation in an enforcement context, when violation does occur.
With respect to enforcement context, companies and senior executives, as well as private equity and other investors should anticipate significantly more assertive and coordinated anti-corruption and anti-money laundering effort, both in the United States and elsewhere, with increased international cooperation, joint investigations and coordinated prosecutions.
As anti-money laundering regime in the United States is expected to expand, many “gatekeepers”, such as lawyers, accountants, investment advisors, incorporators and company service providers, should expect to be subject to increased compliance and reporting requirements that previously were Limited to financial institutions and related professional service providers.
One of the industries that will experience particular scrutiny will be real estate, with the goal of preventing money laundering through real estate investments in the United States.
The Strategy is focused around five mutually-reinforcing pillars to aid with implementation:
1. Modernizing, Coordinating, and Resourcing U.S. Government Efforts to Better Fight Corruption.
This will include law enforcement resources and bolstering information sharing between the intelligence community and law enforcement. Institutional capabilities will be expanded through creation of a new anti-corruption task force at the Department of Commerce, alongside a similar function at USAID and the Department of Treasury.
2. Curbing Illicit Finance.
This pillar emphasizes interconnectedness of corruption and money laundering and focuses on some of the identified weaknesses in the United States financial system. To address this, the following new initiatives will be introduced: (a) increasing corporate transparency through introduction of beneficial ownership data base, to avoid use of shell companies and other opaque legal structure; (b) introducing reporting requirements for certain real estate transactions, to counter the perception of real estate as “a safe way to park value and obfuscate the source of illicit funds”; (c) prescribing reporting requirements for investment advisors and equity funds; and (d) making sure that “gatekeepers” to the financial system, such as lawyers, accountants and company service providers, cannot escape scrutiny.
3. Holding Corrupt Actors Accountable. This stresses vigorous enforcement of foreign bribery cases through FCPA; establishment of a pilot Kleptocracy Asset Recovery Rewards Program, to help to identify and recover stolen assets linked to foreign government corruption; and work with private sector to encourage the adoption and enforcement of anti-corruption compliance programs by U.S. and international companies.
4. Preserving and Strengthening the Multilateral Anti-Corruption Architecture. This pillar is focused on bolstering anti-corruption institutions and implementation of existing frameworks, such as OECD and the United Nations, as well as enhancing multilateral cooperation and assistance.
5. Improving Diplomatic Engagement and Leveraging Foreign Assistance Resources to Advance Policy Objectives This involves elevating corruption as a diplomatic priority, expanding anti-corruption focused U.S. assistance, supporting civil society and investigative journalism.
On a practical level, for private companies across jurisdictions, these developments emphasize the essential nature of effective implementation and evaluation of anti-corruption and anti-money laundering compliance programs. Such programs, when tailored to each company’s risk profile and effectively implemented, serve two main purposes: (a) prevent violations either within the company or when dealing with third parties and (b) provide mitigation in an enforcement context, when violation does occur.
With respect to enforcement context, companies and senior executives, as well as private equity and other investors should anticipate significantly more assertive and coordinated anti-corruption and anti-money laundering effort, both in the United States and elsewhere, with increased international cooperation, joint investigations and coordinated prosecutions.
As anti-money laundering regime in the United States is expected to expand, many “gatekeepers”, such as lawyers, accountants, investment advisors, incorporators and company service providers, should expect to be subject to increased compliance and reporting requirements that previously were Limited to financial institutions and related professional service providers.
One of the industries that will experience particular scrutiny will be real estate, with the goal of preventing money laundering through real estate investments in the United States.
