The US is engaging in an intensive effort to fight global corruption and kleptocracy – Rajika Jayatilake reports

In an increasingly corrupt world, the words of America’s third president and author of the Declaration of Independence Thomas Jefferson – “The price of freedom is eternal vigilance…” – take on an added significance. They bring into sharp focus what’s happening in countries across the world today.

As global corruption watchdog Transparency International (TI) reports, corruption, bribery, theft, tax evasion and other illegal outflows of money cost developing countries US$ 1.26 trillion. This money will enable 1.4 billion people to be lifted above the poverty line for at least six years.

Money stolen by kleptocrats around the world ends up in developed countries and until recently, the US had also been less than vigilant.

The World Bank notes that America creates about 10 times as many legal entities annually as 41 tax havens combined. The banking institution adds: “Because so little information is collected on US companies, it’s impossible to tell how many (companies formed stateside) are shell companies and not operational companies.”

With corruption and kleptocracy escalating at unprecedented levels in recent times, the United States has realised the need to address this.

For instance, on 1 January – with the recently passed historic anticorruption law: the Corporate Transparency Act (CTA), which is part of the National Defense Authorization Act (NDAA) – the US effectively shut opportunities to create anonymous shell companies in America.

The new rules require companies to provide “beneficial ownership” information or the real owners to the Financial Crimes Enforcement Network of the US Treasury Department.

And, from June, President Joe Biden’s administration has engaged in an intensive battle against global corruption. For instance, Biden announced his first National Security Study Memorandum (NSSM) on 3 June, which focusses on fighting corruption in the interest of national security.

He stated in a White House media release: “In issuing this National Security Study Memorandum, I establish countering corruption as a core United States national security interest.”

Four days later, US Attorney General Merrick Garland announced a collaborative initiative known as Joint Task Force Alpha between the Departments of Justice and Homeland Security to fight corruption, transnational human smuggling and trafficking in Central America.

Furthermore, in a strong statement to the world that the US executive and legislature are jointly focussed on fighting the extension of foreign corruption into the United States, the Congressional Caucus against Foreign Corruption and Kleptocracy was launched on 10 June.

Launched by Congressmen Tom Malinowski, John Curtis, Bill Keating and Brian Fitzpatrick, this caucus aims to “educate and mobilise members of Congress on the cross-jurisdictional nature of foreign corruption and identify bipartisan opportunities to work together to curb kleptocracy.”

Moreover, a statement published on the caucus website says that “the new caucus will focus on fighting kleptocracy, an authoritarian governance model in which political leaders routinely engage in illicit self-enrichment, maintain power through corrupt patronage networks, exploit rule of law jurisdictions to conceal and protect stolen assets, and use strategic corruption as a tool of foreign policy.”

Then on 23 June, Senator Ben Cardin of Maryland noted that the Senate Foreign Relations Committee had approved two bills he authored to strengthen US human rights and anticorruption efforts. They are the Global Magnitsky Human Rights Accountability Reauthorization Act – which Cardin says “has changed the way America protects human rights and responds to blatant corruption” – and the Combating Global Corruption Act (which will require the US Department of State) to identify corruption in countries and rank them in a public tiered system with respect to levels of corruption in their governments. This is similar to the Department’s annual Trafficking in Persons Report.

Taking these initiatives as components of one strategic plan, Biden appears to be focussing on three particular enforcement mechanisms. For instance, he intends to curb illicit financing. In the NSSM, he states that the US has to “robustly implement federal law requiring United States companies to report their beneficial owner or owners to the Department of the Treasury.”

He also intends to hold corrupt individuals accountable by calling for increased use of sanctions and criminal or civil enforcement actions. As the third strategy, Biden plans to increase cooperation among federal agencies and coordination with international partners.

Interestingly, the US initiative to fight global corruption was bolstered by the first ever UN General Assembly Special Session against corruption held in New York on 7 June. The website of the UN Convention against Corruption (UNCAC) states that with 116 member nations speaking at the special session, 45 member states addressed the role of civil society in fighting corruption while asset recovery was mentioned by 41 member states.

This appears to be an echo of the statement made by founder of Transparency International Peter Eigen: “People should be conscious that they can change a corrupt system.”

People should be conscious that they can change a corrupt system

Peter Eigen
Founder of Transparency International (TI)