President Biden Makes the Fight Against Corruption a National Security Imperative, Signals Areas of Focus for His Administration
On June 3, 2021, President Biden issued a “Memorandum on Establishing the Fight Against Corruption as a Core United States National Security Interest.” The Memorandum directs the National Security Advisor and Assistant to the President to conduct an interagency review process over the next 200 days, with input from 15 different agencies and offices, to bolster the ability of the US government to combat “the abuse of power for private gain, the misappropriation of public assets, bribery, and other forms of corruption,” both at home and abroad. “Corruption,” the Memorandum explains, “threatens United States national security, economic equity, global anti-poverty and development efforts, and democracy itself.”
Although the Memorandum does not announce any specific policy changes, new programs, or fresh targets of enforcement, it does signal some likely areas of focus for the Biden Administration’s anti-corruption efforts. Among other things, the Memorandum emphasizes:
- Interagency coordination—including not only agencies with civil and criminal law enforcement powers but also the military and intelligence community (whose participation may help invigorate anti-corruption efforts);
- International coordination—including not only on a bilateral basis with partner countries but also (in somewhat of a change in tone from the prior administration) through international institutions and multilateral bodies;
- Transparency in the financial system—including by preventing the use of anonymous shell companies to launder illicit funds and finance criminal activity, in particular by “robustly implementing Federal law requiring [certain] United States companies to report their beneficial owner or owners to the Department of the Treasury” (i.e., the Corporate Transparency Act (31 U.S.C.§ 5336), which Congress enacted on January 1, 2021, over President Trump’s veto);
- Accountability for “professional service providers”—focusing on lawyers, accountants, auditors, and other professionals who “enable the movement of illicit wealth, including in the United States and other rule-of-law-based democracies”; and
- Recovery of stolen assets—including “where possible and appropriate, returning recovered assets for the benefit of the citizens harmed by corruption.”
By casting corruption as a national security imperative, the Biden Administration has all but guaranteed that it will increase the resources available for anti-corruption efforts. Indeed, on June 7, just days after the Memorandum’s release, Vice President Harris, while visiting Central America, announced anti-corruption initiatives for the region—including the creation of a task force to work with the Justice, State and Treasury departments to investigate corruption—as part of a campaign to address the root causes of a surge in migration to the United States.
The Biden Administration has suggested that both the public and the private sectors have roles to play. In practice, this increased attention may mean more intelligence analysts focused on identifying corrupt activity; more support for NGOs and journalists to conduct investigations and advocate for reforms; more foreign assistance programs; more civil enforcement staff at various federal agencies; and more federal prosecutors bringing criminal cases.
Over time, we expect to see a rise in enforcement activity lead to a rise in litigation over the application of anti-corruption laws. Courts increasingly may weigh in on the interpretation of provisions of new statutes (e.g., the Corporate Transparency Act) and not-so-new statutes (e.g., the Foreign Corrupt Practices Act) being used to combat corruption; on the contours of liability for professional service providers associated with the corrupt activity of their clients; on the meaning of a “victim” of corruption for purposes of asset recovery and restitution; and on a host of other legal issues.
At any rate, we will know more about the Biden Administration’s anti-corruption plans by December 20, the deadline for the Assistant to the President and National Security Advisor to submit a report and recommendations to the President for further direction and action. Stay tuned.
*Paul Zebb contributed to this blog post.
© Arnold & Porter Kaye Scholer LLP 2021 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.