Biden White House National Security Study Memorandum -Fight Against Corruption- ahead of G7 & NATO summits (next week) timing matters

enhancing criminal and civil enforcement under the Global Magnitsky Act, TOP Priority. Also enforcement of the Justice Department’s Kleptocracy Asset Recovery Initiative.

On June 3, 2021 President Biden released a Memorandum which seeks to root out corruption within our own Government…the Memorandum reads in part:

…Corruption eats away at the foundations of democratic societies…

Strengthening the resilience of rights-respecting democracies is one of the defining challenges of our era.  Corruption eats away at the foundations of democratic societies. It makes government less effective, wastes public resources, and exacerbates inequalities in access to services, making it harder for families to provide for their loved ones.  Corruption attacks the foundations of democratic institutions, drives and intensifies extremism, and makes it easier for authoritarian regimes to corrode democratic governance.

…Corruption is a risk to our national security, and we must recognize it as such… 

The Memorandum sets forth - establishing and combatting corruption as a core U.S. national security interest. Furthermore President Biden’s Memorandum directing departments and agencies to make recommendations that will significantly bolster the ability of the U.S. government to combat corruption.

Section 1.  Policy.  

Corruption corrodes public trust; hobbles effective governance; distorts markets and equitable access to services; undercuts development efforts; contributes to national fragility, extremism, and migration; and provides authoritarian leaders a means to undermine democracies worldwide.  When leaders steal from their nations’ citizens or oligarchs flout the rule of law, economic growth slows, inequality widens, and trust in government plummets.

…estimated that acts of corruption sap between 2 and 5 percent from global gross domestic product.  While such costs are not evenly shared worldwide, the abuse of power for private gain, the misappropriation of public assets, bribery, and other forms of corruption impact every country and community.  

Sec. 2.  Strategy. 

directing the Assistant to the President and National Security Advisor, in coordination with the Assistant to the President for Economic Policy and the Assistant to the President for Domestic Policy, to conduct an interagency review process under National Security Memorandum/NSM-2 (Renewing the National Security Council System) and develop a Presidential strategy that will, when implemented, significantly bolster the ability of the United States Government;

• a)  Modernize, increase, coordinate, resource, and otherwise improve the ability of key executive departments and agencies (agencies), including those represented in the review and listed below, to promote good governance and prevent and combat corruption, including, as needed, by proposing relevant legislation to the Congress;

• b)  Combat all forms of illicit finance in the United States and international financial systems, including by robustly implementing Federal law requiring United States companies to report their beneficial owner or owners to the Department of the Treasury; reducing offshore financial secrecy; improving information sharing; and, as necessary, identifying the need for new reforms;

• c) Hold accountable corrupt individuals, transnational criminal organizations, and their facilitators, including by, and where appropriate, identifying, freezing, and recovering stolen assets through increased information sharing and intelligence collection and analysis, criminal or civil enforcement actions, advisories, and sanctions or other authorities, and, where possible and appropriate, returning recovered assets for the benefit of the citizens harmed by corruption;

• d)  Bolster the capacity of domestic and international institutions and multilateral bodies focused on establishing global anti-corruption norms (Global Magnitsky Act) asset recovery, promoting financial transparency, encouraging open government, strengthening financial institutions’ frameworks to prevent corruption in development finance projects, and combating money laundering, illicit finance, and bribery, including, where possible, addressing the demand side of bribery

• e)  Support and strengthen the capacity of civil society, media, and other oversight and accountability actors to conduct research and analysis on corruption trends, advocate for preventative measures, investigate and uncover corruption, hold leaders accountable, and inform and support government accountability and reform efforts, and work to provide these actors a safe and open operating environment domestically and internationally;

• f)  Work with international partners to counteract strategic corruption by foreign leaders, foreign state-owned or affiliated enterprises, transnational criminal organizations, and other foreign actors and their domestic collaborators, (Global Magnitsky Act)…including, by closing loopholes exploited by these actors to interfere in democratic processes in the United States and abroad;

• e) Enhance efforts to quickly and flexibly increase United States and partner resources of investigative, financial, technical, political, and other assistance to foreign countries that exhibit the desire to reduce corruption (me thinks Putin;

• h)  Assist and strengthen the capacity of domestic (including State and local) authorities and institutions, as well as partner and other foreign governments at all levels —implement transparency, oversight, and accountability measures, which will counter corruption and provide their citizens with accessible and usable information regarding government programs, policies, and spending;

• i)  Promote partnerships with the private sector and civil society to advocate for anti-corruption measures and take action to prevent corruption; and

•   j)  Establish best practices and enforcement mechanisms such that foreign assistance and security cooperation activities have built-in corruption prevention measures.  

Sec. 3.  Interagency Review. 

In accordance with this memorandum, the interagency review shall consider the recommendations of expert studies and shall include representatives from the following agencies and offices:
     (a)  the Office of the Vice President;
     (b)  the Department of State;
     (c)  the Department of the Treasury;
     (d)  the Department of Defense;
     (e)  the Department of Justice;
     (f)  the Department of Commerce;
     (g)  the Department of Energy;
     (h)  the Department of Homeland Security;
     (i)  the Office of Management and Budget;
     (j)  the United States Mission to the United Nations;
     (k)  the Office of the Director of National Intelligence;
     (l)  the Central Intelligence Agency;
     (m)  the Office of the Chairman of the Joint Chiefs of Staff;
     (n)  the United States Agency for International Development; and
     (o)  the National Security Agency.

Conclusion and forward looking:

Executive departments and agencies shall be responsive to all requests from the Assistant to the President and National Security Advisor for information, analysis, and assistance related to the interagency review.  The interagency review shall be completed within 200 days of the date of this memorandum, and the Assistant to the President and National Security Advisor shall submit a report and recommendations to the President for further direction and action.
link to President Biden’ statement and link to Memorandum on Establishing the Fight Against Corruption as a Core United States National Security Interest

Justice Department’s Kleptocracy Asset Recovery Initiative

DOJ’S Criminal Division’s Money Laundering and Asset Recovery Section, in partnership with federal law enforcement agencies, and often with U.S. Attorney’s Offices, to forfeit the proceeds of foreign official corruption and, where appropriate, to use those recovered assets to benefit the people harmed by these acts of corruption and abuse of office. Below are a few recent enforcement actions:

• July 20, 2016 International Corruption - U.S. Seeks to Recover $1 Billion in Largest Kleptocracy Case to Date

• July 15, 2017 - U.S. Seeks to Recover Approximately $540 Million Obtained From Corruption Involving Malaysian Sovereign Wealth Fund

• October 30, 2019 -United States Reaches Settlement to Recover More Than $700 Million in Assets Allegedly Traceable to Corruption Involving Malaysian Sovereign Wealth Fund

• May 6, 2020 United States Reaches Settlement to Recover More Than $49 Million Involving Malaysian Sovereign Wealth Fund

• September 16, 2020 - U.S. Seeks to Recover More Than $300 Million in Additional Assets Traceable to Funds Allegedly Misappropriated from Malaysian Sovereign Wealth Fund

You can read more about the DOJ MONEY LAUNDERING AND ASSET RECOVERY SECTION (MLARS)…and lastly not that my opinion matters, but it genuinely feels great to have a Presidential Administration that puts forth actual policy and is not afraid about the domestic and international push back - should you be inclined I’ve embedded US Treasury links concerning the;

Global Magnitsky Act…

LEGAL FRAMEWORK FOR THE MAGNITSKY SANCTIONS

The Magnitsky Sanctions represents the implementation of multiple legal authorities.  Some of these authorities are in the form of executive orders issued by the President. Other authorities are public laws (statutes) passed by The Congress. These authorities are further codified by OFAC in its regulations which are published in the Code of Federal Regulations(CFR). Modifications to these regulations are posted in the Federal Register.

Statutes

• Sergei Magnitsky Rule of Law Accountability Act of 2012 - Public Law 112-208

• International Emergency Economic Powers Act (IEEPA), 50 U.S.C. §§ 1701-1706

Code of Federal Regulations

• 31 CFR part 584 - Magnitsky Act Sanctions Regulations

Federal Register Notices

• 82 FR 60507-17 - Final rule - Magnitsky Act Sanctions Regulations

President Biden’s International Trip…

Now most might not understand the timing of today’s memorandum but I’d like to remind you that today’s Memorandum addresses International issues and further affirms our partnership with our International Allies. Next week President Biden is embarking on his first international trip next week;

• Group of Seven Summit and

• NATO’s annual summit

If you read the actual Memorandum - it explicitly directs federal agencies to work with “like-minded international partners” at the United Nations and other members of the G7 - which includes our Allies:

• Canada

• United Kingdom

• Italy

• France

• Germany and

• Japan. 

The G7 Summit meeting starts on June 10, 2021 in Cornwall, England. The NATO Summit will be held in Brussels on June 14. See Biden’s Press Secretary’s Statement on Updates to the President’s Travel to the United Kingdom, Belgium, and Switzerland which was released a few moments ago. So for those not familiar with how things really work in DC - it’s best that you view the content in actual context. Because Biden’s Memorandum wasn’t random - given this was also announced shortly before Biden’s Memorandum - U.S. Treasury says G7 expected to endorse U.S. global minimum tax proposal —it is really refreshing to have an administration that kind of knows what they are doing and rarely deviates from carefully crafted public policy and messaging. For now I genuinely think you are now fully debriefed and have access to the various original documents.

-Filey