Wilmer Hale, 14 June 2021
On June 3, 2021, President Biden issued a National Security Memorandum establishing the fight against corruption both at home and abroad as a core United States national security interest and directing the development of a 200-day interagency review designed to culminate in a report and recommendations on how the United States government and its partners can better combat corruption, enhance transparency in the global financial system and promote good governance. When combined with the anti-money laundering (AML) legislation that entered into force with the January 2021 bipartisan passage of the National Defense Authorization Act for Fiscal Year 2021 (NDAA)1- the most significant reforms to US AML laws since the 2001 adoption of the USA PATRIOT Act-and a review of sanctions policy conducted by the Treasury Department, the Memorandum may lead to a heightened focus on illicit financial activity and corruption and may ultimately result in additional resources being allocated to anti-corruption and AML enforcement.
A. Overview of the Memorandum
Defining the need to “counter[] corruption” as a “core United States national security interest,” President Biden advances a multifaceted policy initiative that rests on three key pillars: promoting good governance, ensuring transparency in global financial systems, and combating and preventing corruption. We can expect more detail on President Biden’s anti-corruption strategy with the publication of the Interagency Report after 200 days. President Biden’s focus on promoting good governance, increasing transparency and reducing impunity centers on the following themes:
Increasing tools available to domestic and foreign anti-corruption efforts, including modernizing resources, strengthening enforcement capacities and promoting anti-corruption norms;
Promoting cooperation among US agencies and with international partners, including by enhancing US anti-corruption resources provided to foreign countries and by establishing best practices for foreign assistance and security cooperation activities;
Creating public-private partnerships to combat corruption, including strengthening the ability of civil society, media, and other oversight and accountability actors, like nongovernmental organizations, to investigate and uncover corruption and advocate for reform;
Combating illicit domestic and international financial activities by, among other things, accelerating regulatory reforms that increase transparency in the beneficial ownership of companies, given the role that opaque corporate structures have played in facilitating corrupt activities; and
Holding accountable corrupt individuals and transnational criminal organizations, including through stolen-asset recovery and the return of those assets for the benefit of citizens harmed by corruption.2
B. Fighting Corruption at the Crossroads of AML, Sanctions and the FCPA
The Biden Administration appears poised to continue the existing trend toward using AML and sanctions tools in concert with the Foreign Corrupt Practices Act (FCPA) to counter foreign government corruption. President Biden’s efforts build upon the framework recently established by the Corporate Transparency Act (CTA),3 a key component of the AML Act of 2020 (AMLA). The CTA requires the Financial Crimes Enforcement Network (FinCEN) to create and maintain a registry of beneficial ownership information for “reporting companies”4 with the same types of information as are required by the Customer Due Diligence (CDD) Rule,5 which applies to the identification and verification of beneficial ownership upon account opening.6 President Biden’s interagency review has been directed to use the “robust” beneficial ownership reporting required by the AMLA/CTA to identify and prosecute bad actors as well as to develop preventive strategies to address the use of anonymous companies by criminals to raise, move, store and use assets acquired through illicit means. The approach may narrow at least one channel for sanctions evasion, money laundering, tax fraud, human and drug trafficking, foreign corruption, and other crimes.7
