President Biden’s Multiagency Countering Corruption Strategy Signals Increased Enforcement, Potentially Significant Expansion Of Aml Compliance Requirements
On December 6, 2021, the Biden administration unveiled its “Strategy on Countering Corruption” (Strategy), which includes far more detailed guidance on how the administration plans to fund, implement and enforce US President Joe Biden’s Anti-Corruption Initiative.
The Strategy, which is the result of a multimonth, interagency collaboration, details the administration’s plans to pour resources into anti-corruption enforcement, further promote the use of data analytics across government agencies, enhance and enforce anti-money laundering (AML) laws and regulations and provide assistance to foreign governments combating corruption.
Of particular significance, the Strategy specifically calls for new legislation and regulations to “address deficiencies in the U.S. anti-money laundering regime” and signals, for the first time, the administration’s support for the Establishing New Authorities for Business Laundering and Enabling Risks to Security (ENABLERS) Act, proposed legislation that would extend said regime and impose significant AML requirements on those who facilitate transactions or create corporate structures, including non-financial institutions such as accountants, investment advisors and lawyers.
THE FIVE PILLARS
Fifteen federal agencies worked together to develop the Strategy in coordination with the White House. It was a major, collaborative undertaking, motivated by President Biden’s focus on anti-corruption as critical to national security. As set forth in the Strategy, the United States will organize its anti-corruption efforts around five “mutually reinforcing pillars of work,” specifically:
Modernizing, Coordinating and Resourcing US Government Efforts to Fight Corruption
Curbing Illicit Finance
Holding Corrupt Actors Accountable
Preserving and Strengthening Multilateral Anti-Corruption Architecture
Improving Diplomatic Engagement and Leveraging Foreign Assistance Resources to Advance Policy Goals.
Within these different pillars are specific objectives, including efforts to improve multinational cooperation through diplomacy, a surge of resources to combat corruption and increased focus on individual accountability—which is consistent with recent statements made by top Department of Justice (DOJ) officials. Of greatest import, the Strategy creates mechanisms for enhanced information gathering and sharing and—very explicitly—calls for efforts to improve financial transparency and impose increased focus and responsibilities on “gatekeepers to the financial system.”
INFORMATION GATHERING AND SHARING
The Strategy’s first objective is to enhance corruption-related research, data collection and analysis so that the government can more effectively map corruption networks, proceeds and dynamics. The federal government plans to bolster information sharing between the intelligence community, law enforcement agencies and agencies dealing with foreign commerce and trade, which will allow for prompt access to broad swaths of data by investigators. A key component of this is the government’s investment in, and reliance on, sophisticated data analytics tools. In addition to building and enhancing the federal government’s own technological resources, the United States is planning to engage with the private sector to collaborate on tracking, developing, improving and applying new and existing technological solutions to systemic challenges in preventing and detecting corruption.
ANTI-MONEY LAUNDERING ENHANCEMENTS
A key underlying goal of many of the administration’s strategic objectives is to significantly boost existing AML laws and enforcement tools. The focus on AML enforcement comes on the heels of significant changes brought about by the Anti-Money Laundering Act of 2020 and the Financial Crimes Enforcement Network’s (FinCEN) announcement in June 2021 of core enforcement priorities, including anti-corruption. The Strategy offers several detailed objectives which, taken as a whole, signal a plan for aggressive enforcement.
In particular, the administration appears to be signaling support for the ENABLERS Act, a sweeping piece of proposed legislation that seeks to impose AML requirements on gatekeepers and so-called “middlemen” who assist on transactions, provide investment and financial advice and facilitate the creation of corporate structures. The ENABLERS Act, as currently drafted, would substantially extend the reach of the Bank Secrecy Act (BSA) and its implementing of regulations by imposing BSA requirements, including requirements to maintain an effective AML program, have a designated compliance officer and file suspicious activity reports (SARs), among others – on accountants, law firms, investment advisors, art galleries, public relations and marketing firms and registered agents. According to the Strategy, the administration is committed to “working with the Congress . . . to make sure that key gatekeepers to the financial system—including lawyers, accountants, and trust and company service providers—cannot evade scrutiny.”
The administration has also indicated that it plans to bolster AML enforcement resources by, among other things, substantially increasing funding for FinCEN and building a database of the beneficial owners of certain companies in order to help domestic and international partners identify bad actors.
IMPROVING INTERNATIONAL COOPERATION
The Strategy seeks to enhance the US government’s visibility well beyond US markets and borders. Even organizations which largely or exclusively operate outside of the United States may see some effects from these objectives. Through engaging the US State Department, the United States Agency for International Development (USAID) and other foreign policy agencies, the administration has pledged to “deepen cooperation with and assistance to countries with the political will for meaningful anti-corruption efforts . . . including, where appropriate, partnering with countries in joint investigations and prosecutions.”
The Strategy also outlines a series of specific initiatives aimed at improving international cooperation, including efforts to support existing anti-corruption “architecture” already in place at various non-governmental organizations, including the Organisation for Economic Co-Operation and Development, the United Nations Convention against Corruption and the Organization of American States, and placing US prosecutors in foreign countries to assist in anti-corruption efforts. The State Department is also leading an interagency initiative to engage partner countries to coordinate law enforcement actions, enforce sanctions, assist in visa restriction implementation and detect and disrupt kleptocracy and foreign bribery.
The Strategy helps to flesh out how the Biden administration plans to execute on its promise to make anti-corruption efforts a law enforcement priority. In addition to broad statements of policy, the Strategy sets forth several specific initiatives that are likely to impact enforcement activities in the coming months.
First, the Strategy’s focus on data-driven investigations (and the need to collect and mine data as part of anti-corruption enforcement efforts) only further underscores the need for organizations to incorporate data analytics into their own compliance programs, and the importance of using data analysis as part of routine and ongoing monitoring efforts. Organizations should consider how they are leveraging data analytics tools in their own corporate compliance efforts.
Second, the administration’s continued focus on AML efforts (and the promised surge of resources to FinCEN) makes clear that financial transactions intended to facilitate and promote bribery schemes will be a core focus. Moreover, even without passage of the ENABLERS Act, the Strategy suggests that scrutiny will extend far beyond traditional banks to accountants, investment advisors and even lawyers involved in helping clients move funds or structure financial transactions. Accounting firms, investment advisory firms and the like may want to review existing AML policies and the sufficiency of any existing compliance and monitoring programs.
Third, organizations worldwide should expect to see the results of the administration’s push for greater global anti-corruption enforcement. In 2020 alone, the United States announced multiple resolutions in the Foreign Corrupt Practices Act (FCPA) space in which foreign law enforcement participated, and the Strategy makes clear that the administration seeks to build on and bolster those efforts. While US regulators have been cooperating and collaborating with foreign regulators for years, the Strategy is explicit that the United States will not just be working with foreign regulators but will be working to improve anti-corruption enforcement abroad through diplomatic channels as well. Global companies, even those with little or no footprint in the United States, should consider US standards when designing their own compliance programs as the United States intends to implement those standards on a global scale.
Co-authored by Benton Curtis & Carlos F. Ortiz