The Biden administration unveiled its approach to crack down on national and international corruption on Monday, the first broad formal strategy of its kind.
The White House rolled out its new multi-pronged approach to stem the flow of illicit cash days before President Joe Biden is set to host the first-ever virtual Summit for Democracy. Senior administration officials on a background call indicated the timing is intentional.
Part of the new anti-corruption strategy is to shed light on all-cash transactions for real estate.
'Certain types of real estate transactions are vulnerable to abuse by illicit actors seeking to launder criminal proceeds, including the proceeds of corruption,' the Biden administration explained in its 38-page plan.
'For example, many real estate transactions involve the use of shell companies, all-cash purchases, purchases by international wire from countries with strict banking secrecy regimes, processes that limit transparency, and the use of intermediaries without AML/CFT obligations.'
There are 110 participants on the State Department's invitation list for the virtual democracy event on December 9 and 10, which aims to help stop democratic backsliding and the erosion of rights and freedoms worldwide. The list does not include China or Russia.
Biden will walk into the summit with the US's new anti-corruption plan likely aiming to get fellow world leaders to commit to joint strategies on sanctions and other methods of policing kleptocratic governments, as well as stepping up ethics guardrails within their own countries.
It's also just before Biden is set to speak with Russian President Vladimir Putin on Tuesday.
The White House is looking to disrupt the flow of dirty money on the world stage by strengthening diplomatic ties with countries willing to fight corruption and leveraging foreign assistance in countries susceptible to kleptocracy or that aid bad actors, according to a 38-page report titled United States Strategy on Countering Corruption.
The administration also hopes to work on existing anti-corruption goals with G7 and G20 partners, senior officials told member of the press on Sunday night.
Biden ordered his government in June to undergo a 200-day study on how best to approach fighting corruption at home and abroad
Biden is also looking to tackle corruption on domestic fronts including: modernizing and coordinating US efforts to fight corruption, curbing illicit finance, holding corrupt actors accountable and preserving existing multilateral anti-corruption frameworks.
To hold corrupt actors accountable, the report of recommendations released Monday notes the Biden administration will 'enhance our strong enforcement efforts' and impose more sanctions.
'We will update the tools available to hold corrupt actors accountable at home and abroad, including by working with the Congress to criminalize the demand side of bribery by foreign public officials. We will work with partners to create complementary regimes and amplify our efforts, coordinating and cooperating on tax enforcement, sanctions, visa restrictions, and other effective authorities and tools,' the plan lays out.
It also notes the plan will launch an interagency Democracies Against Safe Havens Initiative, led by the State Department.
This initiative 'will engage partner countries to coordinate actions on law enforcement, sanctions, and visa restriction implementation, and on detecting and disrupting kleptocracy and foreign bribery.'
Officials across a number of departments including the Treasury, Pentagon and Justice Department will commit to strengthening anti-corruption initiatives as well as new positions created to meet the strategy's specific goals.
The Treasury Department indicated last week that it would be imposing sanctions ahead of Biden's planned summit.
The Pentagon, officials said, would be strengthening its review of countries 'with significant risks of corruption' when considering international security aid.
'The strategy commits to deepening coordination with foreign partner governments to strengthen their ability to pursue accountability for corruption where there's political wealth, while also deepening support to activists and investigative journalists on the front lines,' officials said.
A cornerstone of the plan involves the global financial system and cracking down on high-value real estate purchases, particularly those made by shell companies that hide the real buyer's identity.
As the world's largest economy the US real estate market has long been a target for domestic and international money laundering.
Late last year Congress passed the Corporate Transparency Act, which would create a registry managed by the Treasury Department containing the names, birth dates and current residential or business street addresses of the true owners of both domestically-created shell companies as well as foreign ones conducting business in the US.
Officials floated the possibility of sanctions against individuals who 'are engaged in malign activities' just as Biden readies to speak with Vladimir Putin on Tuesday
Its deadline for implementation is coming at the beginning of the new year. In addition to enforcing that law, senior officials said they would be 'announcing additional action regarding beneficial ownership reporting to address the gaps in our corporate transparency framework.'
Administration officials said specific details on regulating shell company real estate purchases would be announced later this week.
Though no sanctions were specifically mentioned on a call with officials Sunday night, they hinted at penalties for designated individuals 'who are engaged in malign activities that undermine democracy.' Officials didn't elaborate on who would be included.
US officials have strongly hinted at the possibility of more sanctions for Russia as Putin continues to build up a military presence at its border with Ukraine at an alarming rate.
And late last week, the Treasury said it would be imposing sanctions this week to mark the US Summit for Democracy, targeting people engaged in corruption, serious human rights abuse and who undermine democracy, among others.
Ahead of the summit officials said they're also hoping to roll out a 'global accountability program' targeting illicit activity within the construction, transportation and natural resource extraction industries - which the administration deemed at 'high risk' for corruption.
Administration officials also pledged to work with fellow G7 and G20 countries to strengthen existing anti-corruption goals
'We will innovate, adapt, partner, and learn, so as to maximize the potential for diplomatic tools, including foreign assistance and targeted sanctions, to stem corruption and to hold corrupt actors accountable, while expanding efforts to ensure that foreign assistance and engagement do not inadvertently contribute to corrupt practices,' the administration said in its anti-corruption report.
That also involves the creation of a new initiative called Democracies Against Safe Havens, which directs the State Department to work with foreign governments that share anti-corruption goals on enhancing law enforcement capabilities and levying economic and other penalties on bad actors.
On the private sector side, the US government is hoping to curb shady business practices via anti-corruption compliance programs for domestic and international companies and prioritizing anti-corruption language in future trade agreements.
In June Biden issued a memorandum designating corruption at home and abroad as a threat to national security.
With the announcement he ordered a 200-day inter-agency review to build a comprehensive government approach to fighting fraudulent conduct.
'We will take special aim at confronting corruption, which rots democracy from the inside and is increasingly weaponized by authoritarian states to undermine democratic institutions,' the president said. 'We will crack down on tax havens and illicit financing that contribute to income inequality, fund terrorism, and generate pernicious foreign influence.'
Biden also said at the time: 'Corruption threatens United States national security, economic equity, global anti-poverty and development efforts, and democracy itself. But by effectively preventing and countering corruption and demonstrating the advantages of transparent and accountable governance, we can secure a critical advantage for the United States and other democracies.'
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