Loyola University Chicago School of Law, JD 2023
On December 6, 2021, the White House issued a consolidated federal strategy regarding fighting corruption that threatens national security. The memorandum directed a number of federal departments to conduct interagency reviews that allowed them to come together and proceed with a joint strategy to combat corruption in the United States.
Where does the need for this guidance come from?
While much of the corrupt conduct this guidance aims to curb occurs outside the borders of the United States, many of the proceeds from those partaking in corrupt practices find their way into the United States. The White House fully recognized that reality, and takes aim at “curbing illicit finance” through stricter enforcement of a type of regulation already in place in the United States prior: domestic anti-money laundering (“AML”) laws.
One of the key frameworks in place already that helps support these laws is the Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) mandate, which dictates the building of a corporate beneficial ownership data system for use by law enforcement. This system is tasked with collecting a beneficial ownership registry that helps collect information regarding the true owners of corporations, and then pass this information along to Federal agencies to help them better monitor and address national security, intelligence, and law enforcement activity.
How does this new guidance curb corruption?
While much of the framework needed to help curb corrupt practices has already been in place in the United States, the White House has called for expansion of regulations requiring disclosure of beneficial ownership in high value transactions and a focus on transparency and regulation of assets that may be prone to use in laundering money. As a result, this type of revitalized focus on assets prone to misuse should lead to the regulators of those markets to keep a more stringent eye on transactions that may potentially include corruption. One particular existing portion of the domestic AML regulations that the White House aims to use more prominently comes under Section 314(b) of the PATRIOT Act, and allows issuance of requests for information through FinCEN to more than 14,000 different financial institutions to locate accounts and transactions of persons who may be involved in money laundering. The White House’s requirement for regular market players to bolster their attention to following regulatory guidelines will ramp up the compliance responsibilities of parties throughout transactions, but doing so is at the heart of the Administration’s attempt to curb corrupt practices.
Another issue at the center of the White House’s guidance regarding cutting out corrupt practices comes from an increase in regulation affecting both international and domestic agencies. In particular, the Department of Justice (“DOJ”) has broad powers to subpoena not only domestic financial records, but certain financial records held abroad. These powers are particularly important in fighting corruption involving members of foreign governments, as shown in 2017 by the DOJ’s seizure of millions of dollars from former Gambian president Yahya Jammeh.
The White House has begun to send a message that they will no longer tolerate the benefactors of corrupt practices, whether they are at home or abroad, to reap their benefits in our nation. This is demonstrated through the requirement of interagency reviews for agencies who govern corrupt practices in the financial system.
Whistleblowers have often been the informants responsible for exposing corrupt practices both at home and abroad in recent years, and the government has acknowledged the important role that insiders can play in regard to shedding light on these fraudulent practices. An important part of continuing to foster additional reporting from sources both inside and outside of bad acting corporations will come from the United States’ continuing stance of protecting anti-corruption actors as further fostered by the government’s continued support of USAID’s PROSAFE, the Strategic Lawsuits Against Public Participation (SLAPP) statutes, and Lifeline: Embattled CSOs Assistance Fund; a number of programs designed to help journalists do their job and fight the legal actions they often face as a result.
What comes next?
With this coordinated action by the White House directing federal agencies across the board to bolster their efforts in curbing corrupt practices, several agencies have begun to take action. Only three days after the issuance of the strategy by the White House, Secretary of State Antony Blinken announced the State Department was creating a Coordinator on Global Anti-Corruption to follow up on the State Department’s responsibilities per the strategy. While not all agencies prompted have yet taken the action requested by President Biden in his December 9 guidance, the stage has been set. Domestic and foreign actors alike have had the reigns tightened, and regulators are now keeping a keen eye out for corrupt practices.