The Government’s New Strategy To Counter Corruption: What You Need To Know

Client Alert

On June 3, 2021, the White House issued a memorandum formally establishing the fight against corruption as a core national security interest.1 The memorandum directed the development of a presidential strategy to, among other things, combat all forms of corruption both domestically and abroad and hold bad actors accountable. Accordingly, on December 7, 2021, the White House rolled out the “United States Strategy on Countering Corruption” (Report), describing the “comprehensive approach” the United States will take to combat domestic and international corruption and related crimes.2 The multifaceted strategy outlined in the Report promises to have an impact on companies and individuals operating across a broad range of industries from finance to health care. Here are the key takeaways.

A More Robust AML (Anti-Money Laundering) Regime

  • Beneficial Ownership Database: Corrupt actors sometimes conceal the source of their ill-gotten gains by laundering the proceeds through layers of shell corporations. Despite recent advances in the U.S. AML regime, there is no centralized, easily accessible registry containing corporate beneficial ownership information. The Corporate Transparency Act (CTA) addresses this vulnerability by requiring the creation of a beneficial ownership database that will house information regarding the true owners of certain companies. The database, to be created and maintained by FinCEN (Financial Crimes Enforcement Network), will be available to federal, state and local law enforcement; regulators; some foreign authorities; and even financial institutions, with the consent of the companies, in order to facilitate AML due diligence requirements.3
  • Real Estate: U.S. real estate has become a vehicle for some corrupt actors to conceal laundered funds. Recognizing this trend, new regulations will establish reporting requirements for certain entities with information regarding non-financed real estate transactions. 
  • Investment Advisors and Private Placement Funds: Corrupt actors may also conceal their proceeds through the use of investment advisors that are not currently subject to strict AML protocols. The Treasury Department will reinvestigate and determine whether more comprehensive AML requirements should apply to federally registered investment advisors, and consider whether such requirements should also extend to private placement funds, “including investments offered by hedge funds and private equity firms.” 
  • Gatekeepers: Like investment advisors, so-called gatekeepers such as lawyers, accountants, trust and company services providers, and others in a position to assist corrupt actors in obtaining access to the U.S. financial system are not subject to the current AML regime. As part of its comprehensive reforms, the U.S. will “work[] with Congress as necessary” and consider additional ways to penalize corrupt facilitators.

Aggressive Criminal, Civil and Regulatory Enforcement

  • New Tools for Criminal Prosecution of AML Offenses: The United States will aggressively enforce the current laws penalizing AML and AML-related activities, including tax evasion, and consider expanding criminal liability as appropriate through the passage of new legislation. In addition, the Department of Justice (DOJ) will take advantage of newly implemented investigative tools to bring more enforcement actions, including expanded subpoena power to obtain financial records located abroad, new disclosure requirements for beneficial ownership information, and reward-based whistleblower programs for information leading to the identification and seizure of illicit proceeds. 
  • FCPA (Foreign Corrupt Practices Act): Not only will the United States continue to vigorously prosecute companies and individuals involved in foreign bribery cases, through the FCPA, money laundering and civil and criminal forfeiture actions, the Treasury will establish a Kleptocracy Asset Recovery Rewards Program that will provide a financial reward to those who provide information leading to the identification and recovery of assets linked to foreign government corruption held at U.S. financial institutions. This reward program will likely serve as a catalyst for additional investigations and prosecutions under the FCPA and money-laundering statutes. 
  • Abuse of the Public Trust: Law enforcement will be provided with additional resources to prosecute domestic crimes involving abuse of the public trust. This may mean a sharper focus by federal law enforcement agencies and task forces on health care and financial fraud involving government funds, including additional prosecutions related to the current efforts to curb the impact of COVID-19. On the civil side, it may also mean more False Claims Act suits. 
  • Sanctions and Visa Restrictions: The United States will continue to designate and sanction corrupt foreign officials by denying them entry into the United States and/or access to U.S. financial systems. Companies should pay attention to such designations as business dealings with such actors (or companies and individuals associated with such actors) could lead to criminal prosecution or other sanctions for facilitating corruption. 
  • Increased Use of Existing Regulations: The United States will make greater use of existing regulatory authorities, such as Sections 314(a) and (b) of the PATRIOT Act of 2001, which, respectively, allow law enforcement to obtain from financial institutions information about individuals who may be involved in money laundering and terrorist financing, and allow financial institutions—without sanction—to share such information with one another in order to better and more accurately report suspicious activity. FinCEN strongly encourages financial institutions to participate in such information sharing in order to fully comply with their current AML/CFT (Anti-Money Laundering/Combatting the Financing of Terrorism) requirements. 
  • Forthcoming Regulations: On June 30, 2021, FinCEN identified corruption as a priority that constitutes one of the most significant AML/CFT threats in the United States. Regulations specifying how financial institutions should incorporate this priority into their current AML/CFT regimes are forthcoming.

Going forward, the United States will be strictly scrutinizing its current AML regime and looking to address deficiencies wherever present, not only in the markets and spaces referenced above but also those relating to arts/antiquities, construction, transportation, commodities, digital assets and any other space ripe for the concealment of illicit funds. With 2022 just around the corner, it’s time to ensure that your company’s AML policies are robust—both in policy and in practice. Another New Year’s resolution should be an aggressive anti-corruption compliance program. As the Report makes clear, the government will be laser-focused on holding corrupt actors accountable, both domestically and abroad, through criminal and civil enforcement, immigration and economic sanctions, and asset seizures/recovery efforts. You won’t want to be in its crosshairs.


1 https://www.whitehouse.gov/briefing-room/presidential-actions/2021/06/03/memorandum-on-establishing-the-fight-against-corruption-as-a-core-united-states-national-security-interest/

2 https://www.whitehouse.gov/wp-content/uploads/2021/12/United-States-Strategy-on-Countering-Corruption.pdf

3 Likewise, new regulations will promote additional transparency in government procurement by requiring federal contractors and grantees to disclose beneficial ownership as to subject contracts for inclusion in the Federal Awardee Performance and Integrity Information System database.

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