In 2021, the US continued on a downward trend in the Corruption Perceptions Index with the lowest score it’s had since 2012, according to Transparency International. Presidential pushback on the country’s $2 trillion pandemic response package, along with the perpetual effort to discredit election results are likely contributing factors in the 67-point score.
In June 2021, the Biden-Harris Administration released the first of its kind United States Strategy on Countering Corruption, announcing that corruption represents a “core United States national security interest.” Along with this strategy being the first of its kind anti-corruption law in the US, it also represents some pivotal developments in the fight against corruption in areas such as enforcement, the demand side of bribery, and international cooperation. Let’s explore the details of the new corruption strategy, what it means for business risk compliance, and the technology and resources that are available to help organizations manage risk in this area.
Overview of United States Strategy on Countering Corruption
Prior to the release of the new anti-corruption strategy, the US had a number of resources focused on combating domestic bribery activities, including the participation of public officials in commercial activities, political gifts and contributions, and private commercial bribery. However, many advocated for greater federal attention to “soft corruption,” such as “pay-to-play” politics, in which individuals or organizations make campaign contributions to public officials to receive a political benefit.
Augmenting previous anti-corruption laws in the US, the United States Strategy on Countering Corruption utilizes an approach that focuses on five major pillars.
1. Modernizing, coordinating, and resourcing US Government efforts to fight corruption
The US is shifting its fight against corruption to not only focus on corruption on the global scale, but also to ensure that it is addressed on home soil, as well. This includes:
- Establishing a more thorough understanding and direct response to the transnational dimensions of corruption
- Elevating anti-corruption work as an interdepartmental priority in strategic departments and agencies throughout the federal government
- Increasing law enforcement resources for anti-corruption and fostering encouraged information sharing between the intelligence community and law enforcement
2. Curbing illicit finance
Corrupt actors rely on vulnerabilities in the US financial systems to blur asset ownership and launder funds, and as the world’s largest economy, the country bears the responsibility of addressing deficiencies in its own regulatory system, which includes:
- Creating beneficial ownership transparency regulations to identify corrupt actors hiding within corporate structures
- Enacting regulations that target the use of real estate to hide ill-gotten money or to launder illegal proceeds
- Working with Congress and existing legislation to increase the difficulty of gatekeeping the financial system
- Engaging with partner countries through diplomacy, law enforcement cooperation, and capacity building to bolster anti-money laundering systems and improve transparency throughout the international financial system
3. Holding corrupt actors accountable
While working to fill regulatory holes in financial systems, the US will also ensure that those who choose to engage in corrupt activities will be held accountable for their actions, by:
- Launching a new initiative to cooperate with partner countries in detecting and disrupting foreign bribery
- Establishing a kleptocracy asset recovery rewards program to better identify and recover stolen assets linked to foreign government corruption
- Working within the private sector to adopt and enforce anti-corruption compliance programs by US and international companies
4. Preserving and strengthening the multilateral anti-corruption architecture
The US Government intends to strengthen the multilateral initiatives, commitments, and standards of the country’s anti-corruption architecture by:
- Implementing strong transparency and anti-corruption measures across ministerial tracks
- Building and expanding security institutions to target corruption in finance, acquisition, and human resources
- Reinvigorating US participation across several initiatives, including the Open Government Partnership and Extractive Industries Transparency Initiative
5. Improving diplomatic engagement and leveraging foreign assistance resources to achieve anti-corruption policy goals
Foreign assistance is critical for the US to fight corruption. To safeguard assistance funds and improve risk management protocols, the US will expand international cooperation by:
- Prioritizing anti-corruption work within its diplomatic efforts
- Reviewing and re-evaluating criteria for government-to-government assistance
- Expanding anti-corruption focused assistance programs and evaluating their efficacy
- Building additional flexibility into anti-corruption initiatives and broader assistance efforts for global situations
- Bolstering public sector anti-corruption capacity and support
What Does the US Strategy Mean for ABAC in Business?
After understanding the details of the new US anti-corruption laws and strategy, we can better interpret how it will impact anti-bribery and corruption efforts and compliance at the corporate level.
Modernizing corruption efforts
With bolstered support of the US government in the anti-bribery and corruption fight, there may be opportunities to focus on better technology to identify and fight corruption. With a greater FinTech focus and AI resources, financial institutions will have more sophisticated tools for detecting patterns around corrupt transactions, payment tracking, and other fraudulent activity. According to the Justice Department’s criminal division, “We’re continuing to find ways to use data from across the government to help us identify places to focus [our] energy…That certainly includes use of those techniques in the Foreign Corrupt Practices Act (FCPA) space.”
Harnessing technological resources in the fight against corruption will result in greater expectations for organizations in terms of due diligence, data analytics, and reporting protocols. The corruption strategy specifically emphasizes improvements in international information sharing; private sector companies will likely be expected to evaluate all elements of third-party due diligence, particularly in regard to international supply chain partners with varying geographical regulatory requirements.
“Demand side” of bribery
As the US Government more closely targets the demand side of bribery, business will be encouraged to do the same. Corporations will want to ensure all in-house anti-bribery and corruption policies are updated to include language around not only the offering of bribes but also the soliciting or accepting of them. In addition, organizations should perform consistent, updated training for every employee regarding all elements of preventative anti-bribery measures.
Holding corrupt actors accountable
In 2021, prosecutions for corruption-related activities were at their lowest point since 2015. Prosecutors are now diversifying their caseloads and pursuing ties to foreign counterparts in an effort to drive up prosecution numbers, according to the DOJ criminal division. In addition, increased diplomatic cooperation between the US and other countries will hopefully lead to greater coordination in detecting and disrupting foreign bribery. This means that US companies with both domestic and non-US third-party partners and vendors are well advised to be screening for suspicious activity within their supply chains.
Addressing ABAC Compliance with IntegrityRisk
As anti-bribery and corruption legislations evolve not only in the US but all over the world, it’s essential for organizations to have a comprehensive third-party risk management solution in place. In partnership with Lextegrity, IntegrityRisk offers a cutting-edge third party risk screening solution that evaluates bribery and corruption risks throughout internal operations and the supply chain. Our solution is:
- Comprehensive: Screening every third party thoroughly and without exception
- Reliable: Adhering to an effective and documented compliance process that also automatically accounts for changing global regulatory requirements
- Perpetual: Monitoring all third parties on an ongoing basis, not only when an incident occurs
- Auditable: Completing documentation and ensuring a reportable, followable audit trail
- Customizable: Seamlessly augmenting your current compliance processes rather than abandoning your existing ecosystem
- Defensible: Demonstrating compliance through expert-developed technology
It Starts with the Right Technology
To remain in compliance and participate in the fight against corruption, it’s essential that organizations stay on top of anti-bribery due diligence initiatives. To learn more about how IntegrityRisk can improve your ABAC due diligence, work with the compliance experts at IntegrityRisk today.