Biden Administration takes on global corruption with first National Security Memorandum and Latin America Task Force
On June 3, 2021, President Biden issued the first National Security Study Memorandum (the “NSSM”) of his presidency, formally establishing the fight against global corruption as a core national security interest. The NSSM highlights how “the abuse of power for private gain, the misappropriation of public assets, bribery, and other forms of corruption” not only pose financial costs—estimated to be between 2 to 5 percent of global gross domestic product—but also threaten “national security, economic equity, global anti-poverty and development efforts, and democracy itself.”
To combat these risks, President Biden has called on numerous U.S. federal government departments and agencies to develop a unified strategy “to promote good governance; bring transparency to the United States and global financial systems; prevent and combat corruption at home and abroad; and make it increasingly difficult for corrupt actors to shield their activities.” The memorandum directs a 200-day interagency review to strengthen efforts to prevent and combat corruption at home and abroad, culminating in a report with recommendations to the President.
The NSSM laid out wide-reaching goals for the administration’s anti-corruption efforts. These include:
- Modernizing and coordinating the federal government’s resources aimed at confronting corruption, and where necessary, establishing new structures and staffing and improve intelligence collection and analysis, especially related to cryptocurrencies and cybercrime.
- Curbing illicit finance by reducing offshore financial secrecy, seizing stolen assets, and closing regulatory loopholes that allow illicit actors to hide the proceeds of corruption behind anonymous shell companies or residential real estate purchases.
- Bolstering criminal and civil sanctions against illicit actors through the Global Magnitsky Act (which allows the U.S. government to sanction foreign government officials implicated in human rights abuses anywhere in the world), the Department of Justice’s Kleptocracy Asset Recovery Initiative, and other enforcement actions.
- Working with international partners including the UN, G7, Financial Action Task Force, and similar organizations to counteract foreign and transnational corruption.
- Providing support to foreign partners to improve their capacity to implement transparency, oversight, and accountability measures.
The NSSM builds on other anti-corruption efforts of the Biden administration. In April, the Department of the Treasury’s Financial Crimes Enforcement Network issued an advance notice of proposed rulemaking seeking public comment on the creation of a “beneficial ownership” registry under the newly passed Corporate Transparency Act that would ban the practice of registering shell companies anonymously. And on June 7, 2021, the Department of Justice announced the establishment of Joint Task Force Alpha, a law enforcement initiative focused on, among other things, corruption and related crimes in Central America – specifically, Mexico, Guatemala, El Salvador and Honduras.
Taken together, these announcements and others demonstrate the importance that the Biden administration places on anti-corruption efforts, and the corresponding marshalling of resources signals that it will continue to receive focused and coordinated attention from U.S. authorities moving forward. A shift in administrative priorities was widely predicted but now, six months into the Biden administration, those new priorities are coming into greater focus, and anti-corruption stands out as a key enforcement priority. This may have extensive implications in the coming months, impacting everything from enforcement action decisions to U.S. foreign policy decisions. While the ultimate impact remains uncertain, the administrative focus guarantees that the future developments will be as fascinating as they are important to monitor.