The United States will significantly overhaul the way it targets public corruption, dedicating new resources to stemming illicit financial flows and coordinating the effort across the entire federal government, according to a new plan released Monday by the Biden administration.
The United States Strategy on Countering Corruption is the product of a six-month push in the executive branch to “take stock of existing U.S. government anti-corruption efforts and to identify and seek to rectify persistent gaps in the fight against corruption,” according to the proposal.
The 38-page document is unsparing in its assessment that developed economies, including the United States, have long created the conditions that allow corrupt public officials, frequently in the developing world, to hide illicit wealth abroad.
“Emerging research and major journalistic exposés have documented the extent to which legal and regulatory deficiencies in the developed world offer corrupt actors the means to offshore and launder illicit wealth,” the document says.
The plan commits the federal government to a policy built on five pillars. According to the document, those are “modernizing, coordinating, and resourcing U.S. government efforts to fight corruption; curbing illicit finance; holding corrupt actors accountable; preserving and strengthening the multilateral anti-corruption architecture; and improving diplomatic engagement and leveraging foreign assistance resources to advance policy goals.”
Anti-corruption activists pleased
The leaders of several global anti-corruption organizations said they were pleasantly surprised by the forcefulness of the language in the new U.S. plan.
“I think anybody who has been working on anti-corruption for any amount of time is very excited with what the administration has put together,” Tom Cardamone, president and CEO of Global Financial Integrity, told VOA. “It seems like a very well-thought-through approach to the problem.”
The release marks the first time the U.S. has put forward a national strategy to combat corruption, said Gary Kalman, director of the U.S. office of Transparency International. He said it is particularly significant that the Biden administration is recognizing the need to coordinate anti-corruption efforts across the entire federal government.
“It’s not just one agency saying, ‘Oh, we have a problem with corruption in our particular corner of the world.’ But in fact, the corruption impacts so much of what the U.S. government’s trying to do, that we need a whole-of-government approach,” Kalman told VOA.
“Finally, here, the U.S. looks like it’s playing a global leadership role on this really important issue,” said Liz David-Barrett, director of the Center for the Study of Corruption at the University of Sussex. “And we really need global leadership.”
Several prominent Republican lawmakers who have proposed anti-corruption legislation in the past did not comment on the Biden administration proposal when asked by VOA. Earlier this year, a broad Democrat-sponsored bill on voter rights, corruption and campaign finance failed in the Senate, partly because of Republican opposition over expanding ballot access. The Biden anti-corruption strategy does not need support from Congress to take effect.
The plan aims to allocate new resources to law enforcement agencies to strengthen their anti-corruption operations, and will create a coordinating body to align anti-corruption work done across the departments of State, Treasury and Commerce, as well as the U.S. Agency for International Development (USAID).
The government will also develop new rules that will make it more difficult to disguise the origins of assets and their actual owners. This includes developing new disclosure requirements for corporate registrations and real estate transactions.
The administration said it will also develop regulations that will make it harder for “gatekeepers” of the legitimate financial system, including “lawyers, accountants, and trust and company service providers” to open a back door to illicit funds.
The plan also promises extensive work to strengthen international partnerships in the fight against corruption, including the provision of financing and technical support for developing nations struggling to fight sophisticated financial crime.
US is part of the problem
In a fact sheet accompanying the plan, the administration noted that “corrupt actors and their facilitators rely on vulnerabilities in the United States and international financial systems to obscure ownership of assets and launder the proceeds of their illicit activities. As the world’s largest economy, the United States bears responsibility to address gaps in our own regulatory system and work with our allies and partners to do the same.”
David-Barrett said it is significant that the administration is owning up to the U.S. role in creating the problem.
“The U.S. is a major offshore haven where you can set up companies secretly,” she told VOA, referring to laws that allow companies to be established without identifying their “beneficial ownership,” that is, the person or persons ultimately controlling them.
In addition to shutting down a specific means of hiding illicit funds, David-Barrett said, the U.S. cleaning its own house also has other benefits.
“It’s important in terms of the signal it sends,” she said. “To have the U.S. be a major offshore haven sends a signal that this is an acceptable way of doing business and organizing your affairs. To have the U.S. take a stronger stance on this would really help a lot to change international norms on this issue.”
Tied to democracy summit
It is no coincidence that the administration’s anti-corruption plan was announced Monday, just days before the White House is set to host a virtual Democracy Summit with more than 100 other nations. The gathering is part of the Biden administration’s effort to reassert the U.S. position as leader of the world’s democratic countries.
In a column in The Washington Post, released at the same time as the plan, Treasury Secretary Janet Yellen and USAID Administrator Samantha Power made the linkage explicit.
“The gathering is a recognition that the world’s democracies need a new strategy,” they wrote. “For the past 15 years, the number of people living under authoritarian regimes has been rising, while leaders of many democratic countries have been chipping away at fundamental rights and checks and balances. Corruption has made this possible. Autocrats use public wealth to maintain their grip on power, while in democracies, corruption rots free societies from within.”