On June 3, US President Joe Biden issued an unprecedented National Security Study Memorandum designating corruption as a core US national security interest. In that Memorandum, President Biden stated that he was directing the White House to develop a Presidential strategy to bolster significantly the ability of the US Government to carry out ten categories of actions:
- Modernize, increase, coordinate, resource, and otherwise improve the ability of key federal executive departments and agencies ‘to promote good governance and prevent and combat corruption’, including, as needed, by proposing relevant legislation to the US Congress;
- ‘Combat all forms of illicit finance in the United States and international financial systems’, including by robustly implementing US federal law requiring US companies to report their beneficial owner or owners to the US Treasury Department of the Treasury, reducing offshore financial secrecy, and improving information sharing;
- ‘Hold accountable corrupt individuals, transnational criminal organizations, and their facilitators, including by, and where appropriate, identifying, freezing, and recovering stolen assets through increased information sharing and intelligence collection and analysis, criminal or civil enforcement actions, advisories, and sanctions or other authorities, and, where possible and appropriate, returning recovered assets for the benefit of the citizens harmed by corruption’;
- ‘Bolster the capacity of domestic and international institutions and multilateral bodies focused on establishing global anti-corruption norms, asset recovery, promoting financial transparency, encouraging open government, strengthening financial institutions’ frameworks to prevent corruption in development finance projects, and combating money laundering, illicit finance, and bribery, including, where possible, addressing the demand side of bribery’;
- ‘Support and strengthen the capacity of civil society, media, and other oversight and accountability actors to conduct research and analysis on corruption trends, advocate for preventative measures, investigate and uncover corruption, hold leaders accountable, and inform and support government accountability and reform efforts, and work to provide these actors a safe and open operating environment domestically and internationally’;
- ‘Work with international partners to counteract strategic corruption by foreign leaders, foreign state-owned or affiliated enterprises, transnational criminal organizations, and other foreign actors and their domestic collaborators, including, by closing loopholes exploited by these actors to interfere in democratic processes in the United States and abroad’;
- Enhance efforts to quickly and flexibly increase US and partner ‘resources of investigative, financial, technical, political, and other assistance to foreign countries that exhibit the desire to reduce corruption’;
- Assist and strengthen the capacity of US domestic (including state and local) authorities and institutions, ‘as well as partner and other foreign governments at all levels, to implement transparency, oversight, and accountability measures, which will counter corruption and provide their citizens with accessible and usable information regarding government programs, policies, and spending’;
- ‘Promote partnerships with the private sector and civil society to advocate for anti-corruption measures and take action to prevent corruption’; and
- ‘Establish best practices and enforcement mechanisms such that foreign assistance and security cooperation activities have built-in corruption prevention measures’.
As the Memorandum makes clear, President Biden has directed that the White House complete the strategy within 200 days.
While the immediate focus of President Biden and Vice-President Kamala Harris was on conveying a strong anti-corruption message to various Latin American nations, there is no doubt that President Biden intends his National Security Study Memorandum and the forthcoming national strategy to be global in scope. As President Biden and UK Prime Minister Boris Johnson have recently expressed their joint commitment to combating corruption in advance of the recent G7 Summit, it is not too soon for the UK Government and UK corporates and non-profits to consider the possible implications of that Memorandum for their activities:
- Objective 1 – Modernizing US Executive Departments to Combat Corruption: On its face, this objective would not seem to implicate UK interests. This objective, however, would allow the Biden Administration to seek additional funding and other anti-corruption resources for key US departments and agencies—including the Department of Justice, the Federal Bureau of Investigation, the Departments of the Treasury and Homeland Security. Moreover, in a background briefing on the Memorandum, an unnamed ‘senior Administration official’ specifically mentioned the Director of National Intelligence and the Central Intelligence Agency in explaining that ‘we’re just going to be looking at all of the tools in our disposal to make sure that we identify corruption where it’s happening and take appropriate policy responses.’ Accordingly, UK law enforcement and intelligence agencies have reason to expect that in the coming weeks and months, their US counterpart agencies will seek to build upon already strong cooperative relationships to expand collaboration on anti-corruption operations and activities.
- Objective 2 – Combating Illicit Finance: This objective clearly addresses existing legal obligations that the U.S. Government has under the Anti-Money Laundering Act of 2020, including the creation of a beneficial ownership registry by the Treasury Department’s Financial Crimes Enforcement Network. But the calls to “reduc[e] offshore financial secrecy” and “improv[e]” information sharing” have clear implications not only for UK law enforcement and regulatory agencies, but also for UK corporates whose business activities may still include the use of financial-secrecy jurisdictions and shell companies to conceal beneficial ownership.
- Objective 3 – Holding Accountable Corrupt Individuals, Transnational Criminal Organizations, and Facilitators: This objective is virtually certain to prompt US law enforcement agencies (and, given the reference to ‘intelligence collection and analysis’, intelligence agencies) to engage with their UK counterparts toward increasing attention and resources dedicated to anti-corruption investigations, cases, and other actions. The reference to ‘facilitators’ also suggests that the US Government will want to discuss with UK and other nations’ law enforcement agencies how to pursue so-called ‘gatekeepers’ of corruption—including lawyers and financial firms—more vigorously.
- Objective 4 – Capacity-Building for Domestic, International, and Multilateral Institutions: This objective suggests that the US will seek to step up its work with various regional and international organizations such as the OECD and the United Nations, which respectively are responsible for the OECD Anti-Bribery Convention and the United Nations Convention Against Corruption. As part of that process, the US Government may seek to enlist the UK Government’s cooperation and support in fostering other nations’ enhanced anti-corruption efforts.
- Objective 5 – Strengthening Capacity of Civil Society, Media, and Oversight and Accountability Actors: This objective—a clear break from the attitudes and prejudices of the previous Administration—strongly reflects the Biden Administration’s willingness to support and encourage anti-corruption advocacy organizations and investigative journalists to hold corrupt officials and regimes to account. The “senior Administration official’s” mention of possible foreign assistance as part of that effort could be of active interest to UK-based anti-corruption nonprofits and investigative journalists.
- Objective 6 – Working with International Partners Against Strategic Corruption: This objective most plainly signals the US Government’s interest in working with UK and other countries’ law enforcement agencies to investigate and (wherever possible) prosecute corrupt foreign leaders and foreign state-owned enterprises participating in large-scale corruption, as well as transnational criminal groups. In the UK, legislation such as the Bribery Act 2010 and the Criminal Finances Act 2017 already provide UK agencies with ample authority to conduct and coordinate in conducting such investigations. Those agencies, however, should not be surprised if they see that U.S. agencies are interested in increasing the number and scope of investigations directed at foreign-official bribery. If that is the case, as seems quite likely, UK corporates should already be planning to review and enhance their existing anti-bribery compliance programs, to reduce their risk of being caught up in Foreign Corrupt Practices Act and Bribery Act investigations by the Justice Department and the Serious Fraud Office (SFO). The Justice Department and the SFO have a long history of close cooperation in such investigations and the SFO, which continues to attract criticism for its courtroom performance, may welcome the opportunity to repair its public image.
- Objective 7 – Providing Assistance to Countries Showing a Desire to Reduce Corruption: This objective may prompt US agencies committed to providing foreign assistance for anti-corruption program, such as the Department of State, to engage the new UK Foreign, Commonwealth, and Development Office (FCDO) to discuss possible coordination of such assistance. The FCDO is already supporting a United Nations Development Programme initiative to promote a fair business environment and build transparent and open public procurement systems, but should be open to new assistance proposals that could expand the effects of its anti-corruption program.
- Objective 8 – Strengthening Transparency and Oversight Capacity of US Authorities and Foreign Governments: This objective is less likely to be the subject of direct overtures by the US Government. It may, on the other hand, provide a basis for each government to build or reinforce pro-transparency and oversight measures.
- Objective 9 – Promoting Public-Private Anti-Corruption Partnerships: This objective may prompt both Governments to initiate or expand discussions with the private sector on how to partner in supporting anti-corruption initiatives. But leading corporates in both countries need not wait for governments to initiate such discussions, or to conduct their own discussions about industry-led support of such programs. In either event, leading US and UK companies should encourage such discussions, and come prepared with concrete proposals for public-private collaboration.
- Objective 10 – Establishing Best Practices for Corruption Prevention in Foreign Assistance and Security Cooperation. Even though both governments are well-acquainted with anti-corruption best-practice development and capacity-building, this objective can reenergize those efforts and lay a foundation for coordinated efforts on this front.
The preceding list is by no means a complete compendium of all possible actions in furtherance of the Biden Administration anti-corruption strategy. It nonetheless indicates possible, even likely, directions of future bilateral engagement and collaboration on an issue of substantial importance to both countries.
Jonathan J Rusch is Principal, DTG Risk & Compliance; Senior Fellow, Program on Corporate Compliance and Enforcement, New York University Law School; Adjunct Professor of Law, Georgetown University Law Center.