The White House on Dec. 6 released the first-ever U.S. strategy for countering corruption. This follows President Biden’s June announcement elevating the fight against corruption to a core U.S. national security interest, and coincides with the Justice Department’s updated enforcement policy, as well as the Organisation for Economic Co-operation and Development’s updated anti-bribery recommendations.
While the strategy’s five pillars are laudable goals for a new whole-of-government response to foreign corruption, expanded transnational enforcement coordination, and closing financial system gaps that corrupt actors have exploited, the practical impacts for companies can be lost in its policy language and lists of objectives.
Beyond the pillars, companies should watch five concrete trends to make sure their own compliance programs evolve to keep pace with expanding enforcement.
More Anti-Corruption Enforcement Resources and Laws
The Biden administration is looking to build on the success of Foreign Corrupt Practices Act enforcement by increasing the budgets and size of the DOJ, Securities and Exchange Commission, and FBI, as well as creating new units in other agencies and dedicating intelligence resources to data mining.
The administration also calls for legislation “to criminalize the demand-side of bribery by foreign public officials,” and will assist foreign counterparts in creating “complementary regimes and amplify[ing] [US] efforts.”
The new strategy also promotes domestic legislation targeting “greater transparency in the U.S. campaign finance system, and...strengthen[ing] prohibition on foreign national attempting to influence federal, state or local elections.”
Harnessing the Private Sector
The strategy casts the private sector as: (1) a source of information, directing departments and agencies to “work to support and better make use of analysis, conducted by external partners, including...the private sector;” (2) potential initiative partners, looking to “unleash private sector advocacy for anti-corruption reform;” and 3) corporate compliance program architects, committing to “working with the private sector to improve the international business climate by encouraging the adoptions and enforcement of anti-corruption compliance programs.”
The strategy can be read as the government’s own compliance program statement, focusing on terminology and techniques from the DOJ’s own 2020 Evaluation of Corporate Compliance Programs policy, including: risk assessment, tone-at-the-top communications, risk mitigation, data metrics, continuous improvement and governance reporting.
Corrupt actors often use the U.S. financial systems to launder ill-gotten gains. To combat the problem, the strategy builds on the 2020 Corporate Transparency Act and other anti-money laundering efforts to create greater transparency via expanding beneficial ownership regulations, including targeting the reporting of real estate and art and antiquities transactions.
The strategy also encourages new legislation and increased enforcement targeting gatekeepers (including lawyers, accountants, financial advisers, and company services providers).
In a sign that the strategy is more than rhetoric, in the 48 hours after strategy’s release, the Financial Crimes Enforcement Network solicited public comment on imposition of real estate reporting requirements and issued a notice of proposed rulemaking related to beneficial ownership reporting.
Tailored Diplomatic Approaches for Friends and Foes
The strategy also divides countries partnering in the fight against corruption from those enabling corruption. Partners can expect resources, information sharing, and support; corruption enablers can expect sanctions.
The administration has announced a Democracies Against Safe Havens Initiative to “engage partner countries to coordinate action on law enforcement, sanctions, and visa restrictions implementation and on detecting and disrupting kleptocracy and foreign bribery.”
Perhaps looking to the success of the SEC’s whistleblower program, the strategy encourages whistleblowing in challenging jurisdictions. The administration commits to protect anti-corruption actors and “defend the freedom of expression of anticorruption activists, whistleblowers and investigative journalists,” and establishes a pilot kleptocracy asset recovery rewards program.
Companies can expect the State Department to put anti-corruption messaging at the front of their agenda, and encourage reporting of corrupt conduct to U.S. embassies.
Supporting and Monitoring Program Priorities
The strategy calls for enhanced controls and enforcement for administration programs, including:
- international assistance and government-to-government support;
- Covid-19 relief;
- infrastructure and “Build Back Better;” and
- climate action funding.
Without direct reference to the Afghanistan withdrawal, the strategy also looks to enhance corruption controls in U.S. defense spending, including in: (1) direct defense spending and international assistance and (2) defense contractor and supply chain requirements.
Companies from all industries involved in U.S. government programs and contracting are well advised to revisit their compliance programs.
Companies should also expect the administration priorities to impact enforcement, from climate impact to diversity, inclusion and equity. The strategy foreshadows how these issues will shape enforcement, noting that corruption “impacts vulnerable groups at a disproportionate rate...;” “curtails the ability of states to respond effectively to public health crises and to address climate change, migration, and inequities of all forms... ;” and makes states “more vulnerable to terrorist networks, transnational organized and gang related criminal and human traffickers.”
With more stakeholders and more at stake, and with an administration focusing on global, integrated, and holistic anti-corruption approaches, boards must now ask their companies: Is our compliance program appropriately resourced, and can it match these new and evolving expectations?
This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.
Jason Linder, a former senior federal prosecutor, is co-chair of Mayer Brown’s Global Anti-Corruption & FCPA practice. He is experienced in matters involving corruption, securities fraud and other forms of financial fraud, money laundering, tax evasion, and anti-competitive conduct.
Audrey Harris is a former co-chair of Mayer Brown’s Global Anti-Corruption & FCPA practice and chief compliance officer for global resources company BHP and is a Chambers ranked FCPA practitioner with a career dedicated to advising, counselling and defending public and private companies, executives, boards, and foundations in high-stakes investigations, litigation, governance, ethics, compliance and enforcement matters.