This guide elaborates on current safeguards the United States has to protect against various forms of corruption and kleptocracy, including governing bodies, legislation, and initiatives.
Regulatory Governing Bodies
Office of Foreign Assets Control (OFAC, 1950) – A body within the U.S. Treasury, OFAC directs and enforces economic sanctions against actors based on U.S. foreign policy and national security goals. OFAC, along with the Justice Department and State Department, drafts executive orders against selected targets based on the recommendations of the National Security Council for presidential approval.
Financial Action Task Force (FATF, 1989) – An intergovernmental organization, the G-7 created FATF to propose policies and international standards to counter money laundering and terrorist financing.
Financial Crimes Enforcement Network (FinCEN, 1990) – A bureau of the United States Treasury Department, FinCEN is responsible for gathering financial intelligence and enforcing regulatory functions under the Bank Secrecy Act. FinCEN collaborates with financial institutions and law enforcement at the local, state, and federal levels.
Money Laundering and Asset Recovery Section (MLARS, 1994) – A section of the Department of Justice, MLARS is responsible for corrupt asset forfeiture and anti-money laundering efforts. The main objective for MLARS is to recover assets relating to kleptocratic activity.
Anti-Money Laundering Tools
The Bank Secrecy Act (BSA, 1970) – The foundation of Anti-Money Laundering (AML) legislation, the BSA requires domestic financial institutions to adopt AML safeguards and compliance programs that assist the U.S. government with reporting and data collection on cases that involve money laundering, criminal activity, and tax and regulatory matters. Amendments and related legislation include the following:
- Money Laundering Control Act (MLCA, 1986) – to make the reinvestment and hiding of illegal revenue stemming from illegal activities and criminal enterprises a federal offense. Guilty parties are subject to prison and fines.
- Annunzio-Wylie Anti-Money Laundering Act (1992) – This act combines the MLCA with the BSA and enforces punitive action against banks complicit in money laundering and financial crimes. Under the act, financial institutions submit Suspicious Activity Reports (SARs) to the and adopt wire transfer verification mechanisms to enforce stronger record keeping and reporting.
- Anti-Money Laundering Act (AMLA, 2020) – The AMLA amends the BSA to enhance transaction monitoring and reporting to the Treasury. The AMLA extends BSA and anti-money laundering provisions into the antiquities and art market and grants broader subpoena powers.
- Corporate Transparency Act (CTA, 2020) – Part of the AMLA, the CTA collects and reports beneficial ownership information for certain types of entity structures (i.e., large operating companies, FinCEN registered financial institutions, investment companies and advisors) in a registry. The CTA is expected to go into full effect in 2024.
Foreign Corrupt Practices Act (FCPA, 1977) – Governed by the Securities and Exchange Commission and Department of Justice, the FCPA prohibits U.S. businesses or people from bribing foreign officials for business interests. Under the FCPA, publicly traded U.S. companies are required to maintain their bookkeeping to ensure that transactions are accurate and properly reflect the company’s financial activity.
USA PATRIOT Act (2001) – After the Sept. 11, 2001, terrorist attacks, the Patriot Act was passed to prevent terrorist networks from laundering money in the international financial system. Within the financial sector, the act requires financial institutions to establish AML programs that include money laundering investigations, stronger safeguards, effective controls, and lines of communication between government bodies and partnering financial institutions.
Geographic Tracking Order (GTO, 2016) – Mandated by FinCEN, this order requires reporting from title companies on property purchases that fall within a certain financial threshold. GTO protocol is applicable to shell companies or individuals that purchase properties in designated metropolitan areas.
Transparency Mechanisms to Mitigate Reputation Laundering
Foreign Agents Registration Act (FARA, 1938) – FARA requires agents of foreign principals that engage in U.S. political activity and can influence U.S. policy to disclose their employment and register with the Department of Justice.
Lobbying Disclosure Act (LDA, 1995) – This act requires the disclosure and registration of certain lobbying activities. Registrants must declare the issue that the actor is lobbying for, the names of individual lobbyists, and fees received. Registration is submitted to the secretary of the Senate and the clerk of the House of Representatives. Filings are required on a quarterly basis and accessible to the public under the Honest Leadership and Open Government Act (2007).
- Justice Against Corruption on K Street Act (JACK, 2019) – An amendment to the LDA, the JACK Act requires lobbyists to disclose to the clerk of the House and the secretary of the Senate any convictions for crimes relating to extortion, embezzlement, illegal kickbacks, tax evasion, and money laundering. Reports are publicly available on the Senate lobbying disclosure
U.S. Code 30121 (2015) – This code prohibits foreign nationals, with the exception of permanent residents, from financially contributing or donating to any local, state, or federal election; political party; or presidential inaugural committee.
Countering Corruption and Kleptocracy Initiatives
The National Strategy to Internationalize Efforts Against Kleptocracy (2006) – President George W. Bush approved this strategy to target any proceeds illegally obtained by public officials. The strategy launched a coalition of financial centers with the goal of countering safe havens, prosecuting foreign corruption offenders, and the repatriation of recovered assets.
Kleptocracy Asset Recovery Initiative (2010) – A program designed to assist the U.S. government in countering foreign corruption, this initiative seeks to recover stolen assets, forfeit proceeds stemming from corruption, and return them to the appropriate jurisdiction. The program rewards individuals who provide information that leads to the freezing, seizing, forfeiture, or repatriation of corrupt funds.
U.S. Global Anti-Corruption Agenda (2014) – This agenda was established in partnership with the Organization for Economic Cooperation and Development (OECD) and the G-20 to pursue corrupt actors and their proceeds, improve transparency and anti-corruption, and promote open governments.
Global Magnitsky Human Rights Accountability Act (2016) – This act grants the president the authority to place targeted economic sanctions on foreign nationals involved in human rights abuses or corruption and deny them entry into the United States.
Congressional Caucus Against Foreign Corruption and Kleptocracy (CAFCAK, 2021) – This initiative educates and mobilizes members of Congress on the cross-jurisdictional nature of foreign corruption and identifies bipartisan opportunities to curb kleptocracy.
U.S. Strategy on Countering Corruption (2021) – Launched by President Joe Biden’s Administration, this strategy aims to counter corruption through five main pillars: strengthening coordination within the U.S. government; curbing illicit finance; promoting accountability; strengthening anti-corruption infrastructure; and improving diplomatic engagement and foreign assistance.
Task Force Kleptocapture (2022) – This interagency taskforce within the Department of Justice investigates and prosecutes criminal offenses that violate sanctions and economic countermeasures designated by the U.S. Government in response to Russia’s unprovoked invasion of Ukraine. In December 2022, the Senate passed the omnibus spending bill that included an amendment allowing assets confiscated from Russian oligarchs to be applied toward Ukraine’s reconstruction and war reparations.
