June 4, 2021
WASHINGTON – The administration of U.S. President Joe Biden is formally establishing the fight against corruption as a core national security interest.
Biden on Thursday issued his first national security memorandum, outlining his anti-corruption agenda.
“Corruption threatens United States national security, economic equity, global anti-poverty and development efforts, and democracy itself,” the president said in his directive. “But by effectively preventing and countering corruption and demonstrating the advantages of transparent and accountable governance, we can secure a critical advantage for the United States and other democracies.”
Biden’s memorandum is important because it serves as a formal notification from the president “that he expects all relevant federal departments and agencies to up their anti-corruption game in very specific ways,” a senior administration official told reporters on a briefing call Thursday.
In part, the memo calls for combating all forms of illicit finance in the country and with the international financial systems. It calls for American companies to report their beneficial owners to the Treasury Department and reduce offshore financial secrecy.
Treasury’s beneficial ownership registry is intended to effectively bar illicit assets from being hidden behind anonymous shell companies.
“It’s a massive undertaking,” acknowledged the senior administration official, who spoke to reporters on condition of not being named. “We have seen several instances over past years in which the proceeds of corruption have been funneled through shell companies and wound up in major metropolitan areas in the United States to offshore those ill-gotten gains. And so we’re going to be taking additional steps to make sure that that doesn’t happen in the future.”
Laws in the United States and other advanced countries allowing corrupt money to be passed through the financial systems is “a huge problem,” according to Gary Kalman, director of the U.S. office of Transparency International.
“The United States is supposed to be this clean, above-board country, and yet more illicit finance probably moves through the United States than any other country on the planet,” Kalman told VOA.
Transparency International will be watching to see if serious rules emerge “that are really going to clamp down on secret money that’s flowing into the U.S. system, or are they going to come out with rules that are quite weak and let the existing evasions continue?” he asked.
Problem with cryptocurrencies
Biden’s campaign will be complicated by an explosive increase in the use of easy-to-conceal cryptocurrencies, including for ransom payments to cybercriminals who hack vulnerable companies – often targeting the infrastructure of the U.S. and other countries.
“Cryptocurrency allows a lot of illicit financing to take place, so I think the first objective here is to try to crack down on these daily threats,” suggested Charles Kupchan, a senior fellow at the Council on Foreign Relations and professor of international affairs at Georgetown University.
In his memorandum, Biden calls for ”corrupt individuals, transnational criminal organizations and their facilitators” to be held accountable, including taking criminal enforcement action against them.
“This action is long overdue, especially within the context of great power rivalry that is playing out across the globe, where corruption networks are the sinews of authoritarian regimes providing much of their resilience,” Ryan Berg, a senior fellow at the Center for Strategic & International Studies, told VOA.
“Dismantling these embedded and opaque networks will be key to weakening authoritarian regimes and the ballast they provide to one another,” he said. “This directive provides an important frame to consider when developing a whole-of-government approach to strategic competition with actors such as China, Russia and Iran in all of the relevant theaters of competition.”
Tackling corruption, however, is sensitive, controversial, risky and a long-term battle, cautioned Michael Johnston, a Colgate University political science professor emeritus.
International organizations and bodies engaged in fighting corruption have tended to shy away from the battle, sometimes “because they are, in part, financed by the very regimes that they would be taking issue with,” noted Johnston.
The Office of the Director of National Intelligence and Central Intelligence Agency will also be involved in the anti-corruption effort, which will use “all the tools at our disposal to make sure that we identify corruption where it’s happening and take appropriate policy responses,” said a senior U.S. official.
The U.S. action “will put on notice many individuals, both government and otherwise, around the world who engage in corrupt practices,” Kupchan told VOA. “But let’s be honest — this is a long-term process.”
Biden’s memo requests an interagency review to be completed within 200 days with a report and recommendations to be submitted to him for further direction and action.
“The United States will lead by example and in partnership with allies, civil society, and the private sector to fight the scourge of corruption,” said the president in a statement. “But this is a mission for the entire the world. And we must all stand in support of courageous citizens around the globe who are demanding honest, transparent governance.”
Johnston, author of the four-volume anthology Public-Sector Corruption and other books published on the subject, termed Biden’s announcement “a worthy proposal to do what we’ve been trying to do but do it better.”
Johnston said more attention is needed at the grassroots level rather than just targeting it from the top down.
“It isn’t just a technical problem of governance,” he told VOA. “It’s a question of justice that you can look at in virtually any part of the world.”