On June 3, 2021, President Biden issued a Memorandum on Establishing the Fight Against Corruption as a Core United States National Security Interest (the “Memo”). The Memo instructs over 15 US Federal Government departments and agencies to conduct an interagency review to examine corruption as a national security threat and jointly develop a strategy that will significantly enhance the United States’ ability to combat corruption.
This review and mandate established by the Memo represents a powerful, and necessary, cross-government approach to combatting corruption in all its forms. Across all of these agencies, the US Government has long had the tools needed to address corruption, whether it be domestic or abroad and whether involving the payers or the recipients of bribes. While cooperation between these agencies is nothing new, this review and a renewed focus on a holistic interagency approach in this area should provide for greater coordination, cooperation and effectiveness across those different agencies and tools. This approach will cover the full gamut of corrupt actors and their assets: with anti-kleptocracy initiatives, foreign policy and international sanctions targeting corrupt governments and officials abroad; the Foreign Corrupt Practices Act (FCPA) targeting those companies and individuals who pay bribes to get ahead in international business; anti-money-laundering rules and related enforcement targeting the proceeds of corrupt conduct; and the many federal, state and local rules and agencies that target domestic fraud and corruption in its many forms across the country.
In setting its agenda, the Memo stresses the global impact of corruption. Corruption impacts economies and political systems outside of the country where the acts stem from causing an estimated loss of 2 to 5 percent of global GDP due to these corrupt acts. It highlights that these acts weaken economic equity, global antipoverty and development efforts, and lead to national fragility and decreased trust in government, extremism, and migration. The Memo states corruption provides authoritarian leaders with the tools to undermine democracy.
As indicated in the Memo, the Biden Administration aims to promote greater transparency, prevent and combat domestic and foreign corruption, and erode the methods corrupt actors use to escape liability for their actions. To do so, the interagency review will analyze how to modernize, coordinate, and improve methods of combatting corruption. This involves bolstering domestic and international institutions and partnerships, identifying the best practices and enforcement mechanisms to hold corrupt individuals accountable, and strengthening civil society, media, and other oversight actors to conduct research and analysis. Further, the review will determine how to best implement more robust Federal laws requiring U.S. companies to report their beneficial owner or owners, reduce offshore financial secrecy, and improve of information sharing.
The Memo and this approach is consistent with other recent statements coming from the Biden Administration, taking a strong stance on anti-corruption enforcement. This includes recent statements from top enforcement officials within the Criminal Division of the Department of Justice addressing the state of FCPA enforcement, and the Justice Department’s continued focus on enforcement of that statute. In addition, earlier this year, Congress passed the Corporate Transparency Act (CTA), requiring certain new and existing small corporations and limited liability companies to disclose information about their beneficial owners. Then, in April, the Biden Administration requested an additional $64 million in funding for the Financial Crimes Enforcement Network (FinCEN) to build a new beneficial ownership database and implement other anti-corruption rules.
The Biden Administration mandates the interagency review will be completed within 200 days, and it will be interesting to see what actions and initiatives result from the review and their effect on the future of anti-corruption enforcement in the US and abroad. What is clear, is that fulfilling the commitment to combatting corruption in all its forms, will take the work and close cooperation of all of these agencies, together with their international counterparts over many years to come.