On June 3, 2021, President Joe Biden issued a National Security Memorandum on Establishing the Fight Against Corruption as a Core United States National Security Interest (the “Memo”). Although previous U.S. presidents have issued memoranda tying America’s national security interests to targeting foreign corruption, President Biden’s memo is considerably more far-reaching and contains an actionable strategy to treat anti-corruption initiatives as a “core United States national security interest.” When paired with recent, bullish statements by senior Department of Justice (“DOJ”) leadership regarding anti-corruption enforcement, the Memo further emphasizes the priority that the Biden Administration will place on anti-corruption enforcement. The Memo reinforces our view that companies should assume that Foreign Corrupt Practices Act (“FCPA”) and related anti-corruption enforcement will increase in the years ahead.
The Memo is divided into three parts, focusing on the Administration’s policy, its strategy, and mandating an interagency review to better coordinate anti-corruption prevention measures. In terms of the policy, the Memo establishes “countering corruption” as a “core United States national security interest” to combat the erosion of public trust and support for corrupt, authoritarian regimes. In terms of strategy, the Memo directs an interagency review to develop a Presidential strategy to support better coordination and resourcing of executive departments and agencies, enhanced financial system transparency, increased enforcement, and more robust international cooperation, among other initiatives. The Memo directs that the interagency review should include representatives from 15 federal departments and agencies, ranging from the stalwart anti-corruption enforcers at DOJ to agencies that traditionally have been less involved in the anti-corruption space, including the National Security Agency (the “NSA”) and the Department of Energy, among others. Notably absent from this list are the Securities and Exchange Commission (the “SEC”) and the Commodity Futures Trading Commission (the “CFTC”), due to their status as independent agencies.
While interagency cooperation in anti-corruption enforcement has been touted by regulators in the past, the coordinated effort mandated by the Memo is unprecedented and is likely to boost the degree and depth of such efforts across a range of agencies and local U.S. Attorney’s Offices to support anti-corruption prevention, detection, and enforcement. The Memo reflects a much broader strategic view of cooperation than past policy-based efforts largely undertaken by DOJ and the SEC, and we expect that the Memo will result in even greater resources being devoted to anti-corruption enforcement, such as additional FBI agents and prosecutors focused on corruption. In addition, this effort may open new avenues scrutinizing certain industries regulated by agencies such as the Departments of the Treasury, Defense, and Energy. A number of the initiatives described in the Memo also focus on bribe-takers, which may bring into sharper relief the new anti-money laundering (“AML”) enforcement tools enacted as part of the early-2021 National Defense Authorization Act (the “NDAA”), which we covered in a previous alert.
In sum, the Memo reinforces that FCPA enforcement is alive and well and that companies must remain vigilant in managing anti-corruption risks—including the ability promptly to detect potentially corrupt transactions and share information with law enforcement, as enforcers may seek to further deepen cooperation with companies as they target bribe-takers. As we noted in our 2020 Year in Review, this will require companies to continue to invest in and improve the effectiveness of their compliance programs in what will very likely be a more active enforcement environment over the coming years. However, rather than feeling under siege by the government's anti-corruption enforcement efforts, ethical companies with strong compliance programs may have increased opportunities to become allies in this fight.
The following Covington lawyers assisted in preparing this client update: Don Ridings Jennifer Saperstein, Daniel Shallman, and Adam Studner.
If you have any questions concerning the material discussed in this client alert, please contact the members of our Anti-corruption/FCPA practice.
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