On December 6, 2021, the White House announced another “whole-of-government approach” to comprehensively address a problem, releasing the first-ever United States Strategy on Countering Corruption (the Strategy). This follows President Joe Biden’s June 3 national security memorandum, which identified corruption as a core national security interest and directed an interagency review to develop a presidential strategy to combat corruption within 200 days. The Strategy seeks to “identify and rectify persistent gaps in the fight against corruption.” The release was made days before President Biden hosted the Summit for Democracy on December 9 and 10 with leaders from government, civil society, and the private sector from around the world.
The White House announcement and Strategy highlight corruption’s negative effect on the country’s citizens, business environment, and equality. The Strategy focuses on “the transnational dimensions” of corruption, “recognizing the ways in which corrupt actors have used the U.S. financial system and other rule-of-law based systems to launder their ill-gotten gains.” The Strategy takes a broad view of bribery and attempts to address corruption from “small-town hospital administrator[s]” as well as “globe-trotting kleptocrat[s]” and “autocratic leaders.”
The Strategy, a 38-page document, focuses on “five mutually-reinforcing pillars,” each supported by several strategic objectives and lines of effort (LOEs). Government agencies working toward these objectives will make annual progress reports to the President.
Pillar 1: Modernizing, coordinating, and resourcing U.S. government efforts to fight corruption
The Strategy’s first pillar seeks to adapt the United States’ approach to corruption, asking departments and agencies across the government to devote additional resources and collect relevant data to “understand and map corruption networks and related proceeds” and better support other departments and external partners. External partners include foreign, state, local, tribal, and territorial governments as well as partners from the private sector, multilateral institutions such as the G7 and United Nations, civil society, and the media.
The LOEs identified include creating an anticorruption task force at the Department of Commerce similar to task forces at the United States Agency for International Development (USAID), Department of the Treasury (Treasury) , and Department of State (State). The Strategy mentions leveraging existing resources across departments and also seeking additional resources from Congress. The Strategy specifically identifies the need for a significant increase in support for Financial Crimes Enforcement Network (FinCEN) to create a data system detailing the beneficial ownership of certain shell companies in order to assist law enforcement.
Pillar 2: Curbing illicit finance
The Strategy’s second pillar focuses on “financial facilitators” and “vulnerabilities in the U.S. and international financial systems” that allow corrupt actors to launder assets, hide proceeds, and amass ill-gotten wealth. The key strategic objective is to rectify deficiencies in U.S. anti-money-laundering laws. This again mentions FinCEN’s effort to create a beneficial ownership database. It also touches on potential regulatory deficiencies surrounding real estate transactions, investment advising, government procurement, tax evasion, digital currencies, art and antiquities markets, and individuals in a gatekeeping role such as lawyers, accountants, and incorporators. Pillar 2 encourages working with partners and allies to address these deficiencies and improve enforcement.
Pillar 3: Holding corrupt actors accountable
The Strategy’s third pillar reiterates the United States’ commitment to holding corrupt actors accountable by enhancing enforcement of existing laws and expanding laws to criminalize the demand side of bribery. Pillar 3 also seeks to strengthen economic sanctions and visa restrictions to deny corrupt actors access to “countries with sophisticated financial systems, as well as to globally-connected and lucrative markets.” U.S. agencies will create partnerships with other jurisdictions to create “complementary regimes” to achieve these goals and assist other countries pursuing corruption investigations and prosecutions.
The LOEs under pillar 3 identify numerous ways U.S. agencies are pursuing corruption, including the Department of Justice’s (DOJ) new National Cryptocurrency Enforcement Team; DOJ’s Kleptocracy Asset Recovery Initiative and Treasury’s Kleptocracy Asset Recovery Rewards program; Suspension and Debarment Offices and the Interagency Suspension and Debarment Offices; State’s new Democracies Against Safe Havens Initiative; and Section 314 of the PATRIOT Act. It also states that the U.S. will seek full implementation of the Anti-Bribery Convention from the Organization for Economic Cooperation and Development Working Group on Bribery.
The last strategic objective under Pillar 3 is to “support, defend, and protect” members of the private sector and media working to detect and expose corruption. The U.S. will “seek to enlist the private sector as a full-fledged partner in the fight against corruption, stimulating business self-regulation, promoting anti-corruption compliance measures, and unleashing private sector advocacy for anti-corruption reform.”
Pillar 4: Preserving and strengthening the multilateral anticorruption architecture
The Strategy’s fourth pillar looks to the United States’ involvement in and promotion of international initiatives, agreements, and standards. Identifying initiatives by the United Nations, the North Atlantic Treaty Organization, G20, G7, and other international bodies, the U.S. commits to helping preserve existing programs and foster additional efforts. The focus on international partners underscores the Strategy’s offer of financial support and expertise to global efforts to combat corruption.
Pillar 5: Improving diplomatic engagement and leveraging foreign assistance resources to advance policy goals
The Strategy’s fifth pillar seeks to make corruption a diplomatic priority, enabling the U.S. to tailor its efforts to respond to local dynamics and prevent U.S. assistance from being diverted or used to support corrupt actors. It highlights the need for transparency, innovation, and flexibility in the fight against corruption.
Pillar 5 reinforces a priority in Pillar 3 to protect activists, whistleblowers, and journalists from physical and legal threats by the corrupt actors they help expose. The LOEs include a number of programs from the State Department and USAID to recognize, train, and protect these external anticorruption actors.
Overall, the new Strategy emphasizes the importance of a coordinated approach to combatting corruption in all forms, treating corruption both as a foreign policy concern and a national security threat. It focuses on improving coordination between U.S. agencies and departments and external partners and the need for additional resources and legal tools. It identifies specific gaps and deficiencies in U.S. and international anti-money-laundering regimes to be addressed with regulation, legislation, and additional funding. Given this announcement and the emphasis the White House is placing on anticorruption policies, compliance and legal teams should review their current policies and systems to ensure they are well prepared for more robust anticorruption enforcement across the federal government.
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Associates S. Patrick Kelly and Alexia A. Jansen contributed to this Sidley Update.
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