Last month, the Biden administration released its plan to crack down on corrupt practices on a global scale. In a 38-page document called “United States Strategy on Countering Corruption,” the White House outlined the steps it will take to increase financial transparency and combat unlawful acts such as money laundering. The announcement came amid a slew of developments that underscore the administration’s commitment to tackling abuse of power.
The paper contains some concrete tactics for fighting corruption, as well as more general guidelines, including greater coordination between government agencies, such as the Treasury, Commerce, and State Departments. It also lays out the administration’s willingness to provide assistance to foreign governments in their effort to strengthen monitoring and regulation. The document states: “For the U.S. Government to effectively counter contemporary corruption, we must recognize the transnational dimensions of the challenge, and respond in a manner that is both systemic and tailored to local conditions.”
One notable feature of the White House’s anti-corruption strategy is a call for greater scrutiny of intermediaries, such as lawyers and accountants, who are sometimes seen as facilitators of suspicious transactions. Concrete legislation and enforcement guidelines in this sphere are yet to be determined, but increased oversight and harsher penalties for mediators seem likely.
In the same week the strategy document was released, the Treasury Department proposed new rules that would require the reporting of more information on beneficial owners and agents who register companies. The proposed requirements are meant to make it more difficult for corrupt actors to hide illegal activity through the use of shell companies with complex ownership structures. If the rules go into effect, law enforcement and financial services providers will gain access to a federal beneficial ownership database.
The Treasury Department’s efforts to strengthen financial transparency were reiterated in its plan to increase scrutiny of all-cash real-estate deals. Last month, the agency’s Financial Crimes Enforcement Network (FinCEN) asked for public comment on its proposed rule that would introduce reporting requirements for the real estate sector similar to those already in place for financial institutions. The goal of the new rules is to prevent property transactions from being used to hide illegal activities such as money laundering.
Two recent Senate confirmations of White House nominees for key Treasury posts also signal the administration’s determination to stamp out corruption both domestically and globally. In mid-December, the Senate confirmed Elizabeth Rosenberg as Treasury’s assistant secretary for terrorist financing. During a hearing last summer, Ms. Rosenberg expressed support for new rules to prevent money laundering, including creating a beneficiary ownership database.
Earlier in December, the Senate also confirmed Brian Nelson as the undersecretary for terrorism and financial crimes at the Treasury Department. This role, which before the confirmation stayed vacant for two years, is central to the implementation of US sanctions and anti-money-laundering policies. During a hearing last year, Mr. Nelson expressed his commitment to cracking down on money launderers.
Fighting corruption was among the major themes of the US Summit for Democracy that took place on December 9–10, 2021. Officials from more than 100 governments participated in the online event hosted by the US, pledging to cooperate in the global effort to combat abuse of power and illegal financial dealings.
Treasury Secretary Janet Yellen spoke at the summit focusing on her department’s efforts to root out corrupt practices. Ms. Yellen did not mince words when she described the urgency of Treasury’s endeavor: “In the popular imagination, the money laundering capitals of the world are small countries with histories of loose and secretive financial laws. But there’s a good argument that, right now, the best place to hide and launder ill-gotten gains is actually the United States. And that’s because of the way we allow people to establish shell companies. […] This is about to change.”
While the government has outlined a number of planned measures, it remains to be seen which ones will be introduced in the year ahead and how they will affect US businesses’ compliance requirements.