Biden Administration Overhauls the United States' Global Anti-Corruption Framework
On December 9, 2021, the Biden administration published the first-ever United States Strategy on Countering Corruption. This Strategy sets forth a “whole-of-government” approach to combating corruption in the United States and around the world. Individuals and entities should expect an increase in sanctions and scrutiny of activities that present high corruption-related risk. As such, companies and individuals should immediately review current business activities to ensure that they understand their exposure to corruption-related risk and have in place commensurate controls to deter and detect potential problems. A proactive approach to corruption risk now will provide material future benefits if the expected increase in regulatory and law enforcement scrutiny results in a corruption-related inquiry.
In June of this year, President Biden issued a directive to federal agencies instructing them to prioritize global anti-corruption efforts, making anti-corruption a “core U.S. national security interest.” The United States Strategy on Countering Corruption (the “Strategy Document”) issued this week is the end result of a months-long review process.
Spanning just under 40 pages, the Strategy Document sets forth a new anti-corruption model that is centered around five core pillars. Each sets forth various specific strategic objectives and lines of effort that are to be undertaken to achieve those objectives. These pillars provide an indication of where upcoming U.S. government activity could affect individuals and businesses.
First, it is clear that the United States will increase international cooperation and information sharing. Because of the United States’ almost unique ability to access worldwide financial information, not to mention the size of the U.S. financial markets in and of themselves, increased information sharing will lead to more joint investigations and more global enforcement actions. Strategies should be developed to prepare for increased cross-border information sharing.
Second, it is further apparent that the United States will target a greater number of individuals and entities with economic sanctions. In the past weeks we have seen new sanctions announced and the U.S. government has indicated that more announcements will follow. Whereas sanctions previously have focused primarily on terrorism, narcotics trafficking, and human rights abuses, it is clear that a new focus for this administration will be corruption-related sanctions. Sanctions are particularly disruptive to ongoing business relationships, and individuals and entities with operations that touch upon those countries likely to see increased scrutiny should review their sanctions-response strategy and prepare for the possibility of new sanctions. It is likely that sanctions will include an emphasis both on government actors perceived to be demanding corrupt payments and the businesses and businesspeople making the payments.
Third, the U.S. government will implement policies to increase transparency in real estate transactions as well as in digital asset markets and cryptocurrencies. Individuals and entities should prepare for greater scrutiny in these areas. This effort will be enhanced by last week’s announcement by the U.S. Treasury Department of new national policies requiring statements of beneficial ownership for all corporate entities in the United States, with the information accessible to law enforcement and regulatory officials.
This will be an evolving situation as the U.S. government has said that it will continue to assess and refine its anti-corruption efforts pursuant to this Strategy Document. As such, clients would do well to proactively review their own internal due diligence, compliance, and anti-money laundering programs. Clients should also review any internal whistleblower protection programs, as well as investigation and reporting processes. Finally, clients should ensure that they stay up to date on the anti-corruption landscape and that they monitor for related developments in every jurisdiction in which they operate.
How LBKM Can Help
LBKM has extensive experience representing clients involved in FCPA and sanctions investigations and financial crimes litigation, and in advising clients on internal due diligence and compliance with respect to anti-corruption, sanctions (OFAC) and anti-money laundering requirements. Our Financial Crimes Compliance (“FCC”) practice group helps companies measure their exposure to money laundering, bribery and corruption and economic sanctions risk, build commensurate and workable internal compliance solutions, and manage law enforcement, regulatory and counterparty-related issues when they arise.
Our experienced team of former senior in-house compliance professionals and law enforcement officials offers a unique perspective based on our combination of practical in-house operational experience and our prior law enforcement roles. LBKM lawyers have built compliance programs for global companies, provided expert FCC-related testimony for both government and private-sector clients, and defended companies and individuals in high-profile FCC-related criminal and regulatory matters. We help our clients meet regulatory expectations, detect and prevent money laundering, stop corruption, and avoid inadvertent violations of complex and technical sanctions laws.
Our areas of compliance expertise include:
- The Foreign Corrupt Practices Act (“FCPA”) and anti-bribery and corruption compliance
- Anti-money laundering (“AML”) laws and regulations
- The economic sanctions programs administered and enforced by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”)
- The ever-growing field of cryptocurrencies and online fund transfers.
We have successfully assisted foreign and domestic clients—including banks, broker-dealers, and international commercial companies—in establishing effective compliance programs that distinguish them from their peers and that can be leveraged to gain and cement access to U.S. markets. We have also advised clients with respect to FCPA, AML and OFAC risks associated with individual transactions and acquisitions.
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The foregoing is for informational purposes only. It is not intended as legal advice and no attorney-client relationship is formed by the provision of this information.