U.S. Anti-Corruption Strategy Reflects Global Enforcement
On December 6, the White House released America’s first-ever anti-corruption strategy. This follows President Biden’s announcement in June that the fight against corruption is a core US national security interest, and coincides with the Department of Justice’s updated enforcement policy, as well. as updated anti-corruption recommendations from the Organization for Economic Co-operation and Development.
While the five pillars of the strategy are laudable goals for a new whole-of-government response to foreign bribery, broad transnational coordination of enforcement, and reducing the loopholes in the financial system that corrupt actors have exploited, the practical impacts for companies can be lost in its political language and goal lists.
Beyond the Pillars, companies need to watch five concrete trends to ensure their own compliance programs evolve to keep pace with the growing application.
More resources and anti-corruption laws
The Biden administration seeks to build on the success of overseas corrupt practices law enforcement by increasing the budgets and size of the DOJ, the Securities and Exchange Commission, and the FBI, as well as by creating new units in other agencies and dedicating intelligence resources to data mining. .
The administration also calls for legislation “to criminalize the demand for bribery by foreign public officials”, and will help foreign counterparts create “complementary regimes and scale up[ing] [US] efforts.”
The new strategy also promotes national legislation aimed at “greater transparency in the United States campaign finance system, and …[ing] prohibition of foreign nationals from attempting to influence federal, state or local elections.
Harnessing the private sector
The strategy presents the private sector as: (1) a source of information, directing ministries and agencies to “work to support and better use analyzes conducted by external partners, including … the private sector”; (2) potential initiative partners, seeking to “trigger private sector advocacy for anti-corruption reform”; and 3) architects of corporate compliance programs, committing to “work with the private sector to improve the international business climate by encouraging the adoption and enforcement of anti-corruption compliance programs”.
The strategy can be interpreted as the government’s own statement of compliance program, focusing on Department of Justice terminology and techniques. its own 2020 assessment policy for corporate compliance programs, including: risk assessment, tone communications, risk mitigation, data metrics, continuous improvement, and governance reporting.
‘Follow the Money’ Strategies
Corrupt actors often use US financial systems to launder ill-gotten gains. To tackle the problem, the strategy builds on the 2020 Business Transparency Act and other anti-money laundering efforts to create greater transparency by expanding beneficial ownership regulations, in particular by targeting the declaration of real estate, art and antiques transactions.
The strategy also encourages new legislation and stronger enforcement targeting custodians (including lawyers, accountants, financial advisers and business service providers).
As a sign that the strategy is more than rhetoric, within 48 hours of the strategy’s publication, the Financial Crimes Enforcement Network has solicited public comment on the imposition of real estate reporting requirements and issued a proposal notice. regulations relating to the declaration of beneficial ownership.
Tailored diplomatic approaches for friends and foes
the The strategy also separates anti-corruption partner countries from those that promote corruption. Partners can expect resources, information sharing and support; corruption facilitators can expect sanctions.
The administration announced a Democracies Against Safe Havens initiative to “engage partner countries in coordinating actions on law enforcement, sanctions and enforcement of visa restrictions and on detection and disruption of the kleptocracy and foreign bribery ”.
Perhaps given the success of the SEC’s whistleblower program, the strategy encourages whistleblowing in difficult jurisdictions. The administration is committed to protecting anti-corruption actors and “defending the freedom of expression of anti-corruption activists, whistleblowers and investigative journalists”, and establishes a pilot awards program for the recovery of the assets of the kleptocracy.
Businesses can expect the State Department to put anti-corruption messages at the top of their agenda and encourage reporting of corrupt behavior to U.S. embassies.
Support and monitor program priorities
The strategy calls for improved controls and enforcement of administrative programs, including:
- international assistance and government-to-government support;
- Relief from Covid-19;
- infrastructure and “Build back better”; and
- climate finance.
Without direct reference to the withdrawal from Afghanistan, the strategy also seeks to strengthen controls for corruption in US defense spending, including in: (1) direct defense spending and international aid, and (2 ) the requirements of defense contractors and the supply chain.
Companies in all industries involved in US government contracts and programs are well advised to review their compliance programs.
Businesses should also expect administration priorities to impact enforcement, from climate impact to diversity, inclusion and equity. The strategy foreshadows how these issues will shape enforcement, noting that corruption “has a disproportionate impact on vulnerable groups …”; “Limits the capacity of States to respond effectively to public health crises and to combat climate change, migration and inequalities in all their forms …; And makes states “more vulnerable to terrorist networks, transnational organized criminals and gangs and human traffickers.”
With more stakeholders and more stakes, and with an administration focused on comprehensive, integrated and holistic anti-corruption approaches, boards must now ask their companies: Is our compliance program resourced appropriate and can it meet these new evolving expectations?
This column does not necessarily reflect the opinion of the Bureau of National Affairs, Inc. or its owners.
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Audrey harris is a former Co-Chair of Mayer Brown’s Global Anti-Corruption and FCPA Practice and Chief Compliance Officer for Global Resource Company BHP and is a Chambers-Ranked FCPA Practitioner with a career dedicated to advising, advising and defending companies public and private, executives, boards of directors, and the foundations of high-stakes investigation, litigation, governance, ethics, compliance and law enforcement.
Jason linder, former Senior Federal Prosecutor, is Co-Chair of Mayer Brown’s Global Anti-Corruption & FCPA Practice. He has experience in corruption, securities fraud and other forms of financial fraud, money laundering, tax evasion and anti-competitive conduct.