On June 3, 2021, President Joe Biden issued a new directive directing federal agencies to step up their anti-corruption initiatives as part of US foreign and national security policy. The National Security Study Memorandum (the “Memo”) publicly informs federal agencies of an overhaul of the federal government’s anti-corruption efforts. There will be a 200-day interagency review on how to improve anti-corruption measures that will result in a report and recommendations to be delivered to the president.
The memo highlights financial crime and cybercrime as the main culprits of domestic and foreign corruption. The Biden administration recognizes that anti-corruption laws need to be reassessed to respond to the growing use and presence of cryptocurrency. This will likely result in updates to the Bank Secrecy Act, which allows law enforcement to track how money flows through financial institutions.
The Memo also has implications for business owners in addition to financial institutions. The note emphasizes the need for collaboration between government and the private sector in the effort to improve anti-corruption measures. This will likely take the form of stricter enforcement of rules requiring U.S. companies to report their beneficial owner (s) to the Treasury Department. Enforcement of these rules will mean that when the Justice Department finds evidence of misconduct, businesses and financial institutions should expect an increase in the number and extent of oversight imposed. This requirement aims to eliminate shell companies and disrupt tax havens by reducing offshore financial secrecy and improving information sharing.
While most new anti-corruption initiatives will not be rolled out until after the interagency review, companies should begin to prepare for more severe consequences for breaches and an increased need for compliance programs. effective. Levenfeld Pearlstein’s Corporate group will continue to monitor any developments related to cybersecurity burdens imposed on private companies.