U.S. Secretary of State Kerry reaffirmed the Administration’s commitment to combating corruption at the Anti-Corruption Summit in London this week. Heads of state from more than forty countries, multinational organizations, and civil society leaders joined together to make a clear statement: corruption drives political instability, erodes trust between citizens and government, cripples basic functions of state like security and justice, fuels violent extremism, and stifles economic prosperity and human rights. That is why the Administration has deepened its commitment to fiscal transparency and is reaffirming the effort to fight corruption at home and abroad. The major initiatives include:
(1) Strengthening Law Enforcement Efforts and Working Across Borders to Hold Corrupt Actors Accountable:
- Global Asset Recovery Forum (GFAR) – The United States will co-host with the United Kingdom the first meeting of the GFAR in 2017 in Washington, DC. This forum will create a robust mechanism to work collaboratively on major asset recovery cases where there is emergent need to return assets for the benefit of the people harmed by corruption.
- International Anti-Corruption Coordination Center (IACCC) – The IACCC will coordinate cross-border investigative communication, increase data sharing between key financial hubs, and assist developing countries with corruption cases. The United States is also joined by several countries representing key financial centers in supporting the IACCC.
(2) Strengthening Capacity to Prevent and Fight Corruption in Countries Across the Globe:
- An “Integrity Initiative” to Boost Capacity – After doubling anti-corruption assistance in the past four years, the Department of State is committing an additional $70 million, pending congressional approval, for capacity-building efforts globally, including training for thousands of law enforcement and justice-sector officials all over the world; platforms that mitigate opportunities for graft; efforts to tackle the security and corruption nexus; and a consortium to support civil society and media organizations.
- A Global Consortium of Civil Society and Investigative Journalists against Corruption – Building on our continued efforts to partner with and support non-governmental networks that work across borders to expose corruption globally, this new consortium will support the critical work of investigative journalists and civil society networks in driving public demand for political will and action by law enforcement.
- Maximizing Impact of the Open Government Partnership (OGP) – The United States will continue its active engagement in and support for OGP, a partnership between government and civil society across 70 countries to advance transparency and accountability through national commitments for reform.
(3) Greater Financial Transparency at Home to Prevent Perpetrators of Fraud, Tax Evasion, Illicit Funding from Hiding in the Shadows:
- New Beneficial Ownership Legislation – The Administration’s new legislative proposal would require all companies formed in the United States to report information about their beneficial owners to the Department of Treasury, for the first time making such information readily available to law enforcement.
- Combating Transnational Corruption – Draft legislation would enhance and strengthen our efforts to combat transnational corruption through enhancing law enforcement’s ability to prevent bad actors from concealing and laundering illegal proceeds of transnational corruption, and would allow U.S. prosecutors to more effectively pursue such cases.
- Reciprocal Foreign Account Tax Compliance Act (FATCA) Legislation – The President has proposed providing full “reciprocity” under FATCA in the last three budgets he submitted Congress, which would strengthen the United States’ hand in pressing other countries to improve transparency and ensure we live up to our end of the bargain.
- Customer Due Diligence (CDD) Rules – Treasury regulations will enhance transparency and protect the integrity of the financial system by requiring financial institutions to know and keep records on who actually owns the companies that use their services.
- IRS Rule on Single-Owner LLCs – New proposed Treasury/IRS tax rules will close a loophole allowing foreigners to hide assets or financial activity behind anonymous entities established in the United States.
- Geographic Targeting Order (GTO) Rules for High-End Real Estate – In January, Treasury issued GTOs that will temporarily require certain U.S. title insurance companies to identify the natural persons who are the true owners behind the companies used to pay “all cash” for high-end real estate in certain geographic areas. The proposed beneficial ownership legislation would also expand the scope of future GTOs to include bank wires in addition to those paid by cash or other monetary instruments, such as cashier’s checks.
- International Tax Treaties – The Administration is also calling upon the Senate to finally approve tax treaties that have been pending for several years and that would help crack down on offshore tax evasion.
(4) Tackling the Corruption-(In)Security Nexus:
- Stronger Security Assistance Oversight – Corruption threatens national security. When security institutions are undermined through corruption, they are unable to protect citizens, defeat terrorists, or defend national sovereignty. The United States is working to address the security costs of corruption through integrating anti-corruption components into training for security forces; better assessing corruption risk throughout security cooperation with foreign security forces; and ensuring that our security assistance also addresses governance goals.
