Biden Administration Identifies Corruption as Threat to National Security
The Biden administration has taken a significant step forward in combating corruption by issuing a national security study memorandum that labels acts of corruption as a threat to national security. The memo, released on June 3, 2021, orders an interagency review process to lay the groundwork for a new presidential strategy against corruption.
Threatening National Security
According to the document, corruption is now considered a “core United States national security interest.” Fifteen government departments and agencies responsible for economic and defense policy have been tasked with cooperating in a study of existing processes and recommending a new presidential strategy to enhance the government’s ability to detect and prosecute individuals and entities engaged in corruption both domestically and abroad.
Focus on Demand Side of Bribery
The new strategy will focus on the “demand side” of bribery, aligned with provisions of the Anti-Money Laundering Act of 2020 (AMLA), including Title LXIV, also known as the Corporate Transparency Act (CTA). The CTA requires certain US companies to report their beneficial owners to the Treasury Department, reducing offshore financial secrecy and improving information sharing.
Enablers of Corruption
The memo identifies anonymous shell companies, professional service providers, and opaque financial systems as enabling the movement and laundering of illicit wealth, including corruption proceeds. To address this issue, the government will implement federal law requiring certain US companies to report their beneficial owner or owners to the Treasury Department, reducing offshore financial secrecy and improving information sharing.
International Frameworks and Partnerships
The new presidential strategy will also focus on international and domestic frameworks and partnerships, bolstering resources focused on setting international anti-corruption standards and enhancing financial institutions’ anti-bribery and corruption programs. The strategy will also tie anti-corruption measures to foreign and security assistance programs.
Enhancing Anti-Corruption Efforts
In related news, the Financial Action Task Force, World Bank, International Monetary Fund, and other supranational bodies have been tapped for additional resources to enhance partnership on anti-corruption efforts.
What’s Next?
Financial institutions and government agencies will need to prepare for and analyze the new presidential strategy once it is published, assessing current processes and staffing in areas highlighted by the memo and identifying those that may require enhancements. Guidehouse, a leading consulting firm, has a team of AML and ABC experts available to help firms and agencies assess corruption exposure and develop programs to prevent and detect illicit finance related to corruption.
Conclusion
The Biden administration’s move is seen as a significant step forward in combating corruption and its impact on national security. As the government continues to develop its new strategy, financial institutions and government agencies will need to work together to ensure that anti-corruption policies are effective and comprehensive.