Biden administration issues directive for revitalized anti-corruption and financial crime strategies, signals increased enforcement effort | Kramer Levin Naftalis & Frankel LLP



On June 3, 2021, President Biden released his Presidency’s first National Security Study Memorandum, in which he declared the fight against corruption “a fundamental interest of the national security of the United States.”[1] The memorandum sets out the Biden administration’s policy to promote democracy and combat authoritarianism through increased efforts to root out corruption, including increased enforcement of laws targeting financial crime.

Explaining that “acts of corruption undermine between 2 and 5% of the world’s gross domestic product”, the memorandum notes that “[c]orruption threatens US national security, economic equity, global anti-poverty and development efforts, and democracy itself. Through a policy of “effectively preventing and combating corruption and demonstrating the benefits of transparent and accountable governance,” the United States “can gain a critical advantage for [itself] and other democracies. In a statement accompanying the release of the memorandum, President Biden reiterated that “[f]fighting corruption is not just good governance. It’s self-defense. It is patriotism, and it is essential to preserving our democracy and our future.[2]

In terms of concrete action, the memorandum assigns the national security adviser to lead an interagency review process comprising more than a dozen federal agencies to produce and deliver within 200 days a report containing recommendations to achieve the objectives. President’s policies. The report will present a strategy drawn from the work of each of these agencies on how the United States can modernize, coordinate and better use its resources, as well as partner with other countries to fight corruption.[3]

As the Memorandum explains, the proceeds of “embezzlement of public property, bribes and other forms of corruption… cross national borders and can impact economies and political systems far from their origin. . Anonymous shell companies, opaque financial systems, and professional service providers allow the movement and laundering of illicit wealth, including in the United States and other rule-of-law democracies. In seeking recommendations to combat such corruption, the Memorandum in particular seeks recommendations for new legislative proposals and relevant sanctions; how to fight more vigorously against money laundering, illicit financing and corruption; means to identify, freeze, recover and return stolen assets; efforts to strengthen international cooperation; and strategies to support the anti-corruption efforts of other nations and the work of NGOs to expose foreign corruption.

The administration has indicated that specific areas of concern to be addressed by the new strategy include the increasing use of anonymous shell companies and residential real estate purchases in the United States to launder money, the increasing use of crypto -money as a means of illicit financing, and the interference of foreign actors in the domestic politics of the United States.[4] On the latter front, making clear reference to the rise of foreign actors influencing the domestic political environment of the United States, the Memorandum seeks recommendations specifically to “counter the strategic corruption of foreign leaders, foreign state-owned enterprises or affiliates. , transnational criminal organizations and other foreign actors and their domestic collaborators, including, by closing the loopholes exploited by these actors to interfere in democratic processes in the United States.

The memorandum follows the passage of the National Defense Authorization Act of 2021 in January, and with it the Corporate Transparency Act (CTA).[5] CTA establishes database to facilitate information sharing between law enforcement agencies, national security agencies, financial institutions and the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) to combat money laundering and other financial crimes. It does this by establishing new federal beneficial ownership reporting requirements for certain entities domiciled or active in the United States, including foreign entities that operate in the United States, and directing the creation of a database. federal government to host the collected beneficial ownership information. The database on beneficial owners is a key part of the administration. President Biden’s memorandum calls for recommendations on strategies to “implement effectively[]”The new beneficial owner declaration requirements. The administration’s recent budget proposal called for an additional $ 60 million in funding for the initiative, about 50% more than what was passed last year. The memorandum also aims to build on the Justice Ministry’s Kleptocracy Asset Recovery Initiative, which since 2019 has facilitated the repatriation of nearly $ 1.5 billion in stolen assets to their countries. original.

The memorandum follows the earlier passage of the Anti-Money Laundering Act of 2020 (AMLA), an overhaul of U.S. anti-money laundering laws that establishes a new reward program for whistleblowers at the Department of the Treasury. To encourage reporting of bank secrecy law (BSA) violations, the new program offers willful whistleblowers up to 30% of total funds recovered by the Treasury over $ 1 million, if recovered by legal or administrative action brought under the BSA.[6]

The memorandum, which clearly emphasizes increased coordination, cooperation and enforcement, in conjunction with Congress’s increased emphasis on anti-corruption issues, likely signals an increase in enforcement action and prosecution. for corruption and financial crimes. Companies and their boards of directors must remain attentive to creating and sustaining a culture that emphasizes compliance and anti-corruption training; assess their risk of financial crime; and ensure compliance with all of these laws, including corrupt practices abroad, money laundering, sanctions and anti-boycott laws.


[1] The White House, Memorandum on Establishing Anti-Corruption as a Core United States National Security Interest, June 3, 2021, available at 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] The White House, Statement by President Joseph R. Biden, Jr. on Anti-Corruption National Security Study Memorandum, June 3, 2021, available at https://www.whitehouse.gov/briefing-room/statements-releases/2021/06/03/statement-by-president-joseph-r-biden-jr-on-the-national-security-study-memorandum- on-the-fight-against-corruption /.

[3] These agencies include the Office of the Vice President, State Department, Treasury Department, Department of Defense, Department of Justice, Department of Commerce, Department of Energy, Department of Security Department, Office of Management and Budget, United States Mission to the United Nations, Office of the Director of National Intelligence, Central Intelligence Agency, Office of the Chairman of the Joint Chiefs of Staff, United States Agency for International Development and the National Security Agency.

[4] See The White House, Context Appeal to the press by senior officials of the administration on the fight against corruption, June 3, 2021, available at https://www.whitehouse.gov/briefing-room/press-briefings/2021/06/03/background-press-call-by-senior-administration-officials-on-the-fight-against-corruption/.

[5] National Defense authorization law for fiscal year 2021, https://www.congress.gov/bill/116th-congress/house-bill/6395.

[6] 31 USC § 5323.

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