White House Releases "Strategy on Countering Corruption" Framework
Earlier this week, the White House released a detailed, 38-page written “Strategy on Countering Corruption” (the Strategy). The document resulted from a six-month interagency review, triggered by President Biden designating the fight against corruption as a “core national security interest of the United States” in June 2021.
Here are three key takeaways from the Strategy for businesses and individuals engaged in international commerce:
- One focus of the Strategy is strengthening anti-corruption efforts in foreign countries. This attempt to better address the “demand” side of corruption in foreign countries is laudable as it will to help ensure a level playing field for U.S. companies versus foreign competitors, who may not be subject to the jurisdiction of the Foreign Corrupt Practices Act (FCPA).
- Another emphasis of the strategy is combatting illicit finance and, relatedly, strengthening the anti-money laundering regulatory regime. This highlights a point we have been making repeatedly: a U.S. company’s anti-corruption compliance program cannot be focused only on the FCPA and must take into account other risk factors for a company engaged in international commerce, including AML, the False Claims Act (especially for U.S. government contractors), prohibitions against bid-rigging and market manipulation, and the U.S. sanctions regime.
- Finally, the use of the national security apparatus to combat what has historically been a criminal and regulatory issue bears careful watching. The Strategy, for example, discusses “enhanc[ing] corruption related research, data collection and analysis” and “bolstering information sharing between the Intelligence Community and law enforcement.” As in other contexts, the courts (and defense counsel) may be called on to ensure that a laudable end (combatting corruption) is not used to justify means that infringe on the constitutional rights of U.S. citizens.
The 38-page Strategy establishes five pillars for organizing future anti-corruption efforts:
- “Modernizing, Coordinating, and Resourcing U.S. Government Efforts to Better Fight Corruption,” which focuses on improving information sharing both domestically and internationally, “increasing intelligence prioritization, collection and analysis on corruption, corrupt actors, and their networks,” and “bolstering information sharing between the Intelligence Community and law enforcement.” Again, while information sharing is laudable, the use of the national security apparatus in enforcement investigations always bears careful watching.
- “Curbing Illicit Finance,” which focuses on “address[ing] deficiencies in the U.S. anti-money laundering regime." Some of this effort is already under way, with the passage earlier this year of the Anti-Money Laundering Act and the Corporate Transparency Act, which we discussed here. Among other things, these statutes include substantial amendments to the Bank Secrecy Act and impose beneficial-ownership reporting requirements on foreign companies, which will result in a forthcoming database of beneficial owners of companies to help identify “bad actors.” The Strategy also suggests passing additional regulations “targeting those closest to real estate transactions to reveal when real estate is used to hide ill-gotten cash or to launder criminal proceeds,” “prescribing minimum reporting standards for investment advisors and other types of equity funds,” and ensuring that “key gatekeepers to the financial system,” including lawyers and accountants, “cannot evade scrutiny.”
- “Holding Corrupt Actors Accountable,” which echoes the DOJ’s focus on individual deterrence highlighted in the 2015 Yates Memo and recently reiterated in changes to DOJ Policy by the Biden Administration, discussed here. In addition, this pillar emphasizes “working with the private sector” to improve anti-corruption compliance programs, enhancing the U.S. government’s ability to “identify and recover stolen assets linked to foreign government corruption held at U.S. financial institutions,” and “elevating diplomatic and development efforts to support, defend, and protect civil society, and media actors, including investigative journalists.” This pillar also seeks to implement a pilot program at the Department of the Treasury that will pay financial rewards to those who help the US government identify and recover assets linked to foreign government corruption.
- “Preserving and Strengthening the Multilateral Anti-Corruption Architecture,” which focuses on multi-lateral anti-corruption efforts, through the G20, the G7, NATO, and other multi-national organizations.
- “Improving Diplomatic Engagement and Leveraging Foreign Assistance Resources to Advance Policy Objectives,” which focuses on supporting anti-corruption efforts in foreign countries.
As always, the devil is in the details (and in the execution), and it remains to be seen how much of the Strategy can and will be implemented. What is clear is that anti-corruption efforts will receive increased funding and focus from U.S. authorities in the coming years. This additional funding will also increase the incentives to potential whistleblowers and the resources available to the government to investigate the resulting tips, which we expect will increase the likelihood that companies will receive U.S. government inquiries about their international commercial dealings.
There will also be new opportunities for companies to benefit from the significant investment of U.S. agency time, personnel, and resources to mitigate compliance risks of entering new markets or working with new business partners by seeking to leverage new databases, country-specific action plans and the increased flow of intelligence to departments and agencies with personnel assigned to help expand foreign commerce.
Our team at Baker Botts—which includes lawyers with deep experience across the FCPA, national security investigations, sanctions and export control matters, antitrust, the False Claims Act, all which will see increased focus as a result of this Strategy—is well equipped to help clients both build and ensure they have strong, effective anti-corruption programs and respond to any government inquiry.
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