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| 1 minute read

Getting serious on corruption...

The typical organization loses 5% of annual revenues to fraud*.

The recent 'Memorandum on Establishing the Fight Against Corruption as a Core United States National Security Interest' (Memorandum) issued through White House Presidential Actions on June 03, 2021 estimates that "acts of corruption sap between 2 and 5 percent from global gross domestic product".

As the title of the Memorandum suggests, it discusses much more than the financial costs of corruption, stating that "corruption threatens United States national security, economic equity, global anti-poverty and development efforts, and democracy itself".

The strategic review now under way will seek, amongst others, to:

  1.  "modernize, increase, coordinate, resource and otherwise improve" government agencies tasked with anti-corruption efforts;
  2. "combat all forms of illict finance in the United States and international financial systems";
  3. "hold accountable corrupt individuals, transnational criminal organizations, and their facilitators";
  4. "bolster the capacity of domestic and interntaional institutions and multilateral bodies" covering a wide range of relevant activities;
  5. "support and strengthen the capacity of civil society, media, and other oversight and accountability actors";
  6. "establish best practices and enforcement mechanisms'.

In addition to increasing domestic resourcing and strengthening the enforcement capacity of domestic authorities and institutions, efforts will also be taken to enhance anti-corruption cooperation and effectiveness with "foreign countries that exhibit the desire to reduce corruption". 

As indicated above, the scope and coverage of the inter-agency review are extensive, and will cover consideration of preventative, detective and investigative measures, including "anonymous shell companies, opaque financial systems, and professional service providers [which] enable the movement and laundering of illicit wealth".

Both the language and messaging of the Memorandum are unequivocal - the impact of corruption is much more than financial, and heightened enforcement is coming hard and heavy!

*Association of Certified Fraud Examiners, Report to the Nations 2020

In financial terms alone, the costs of corruption are staggering.  It has been estimated that acts of corruption sap between 2 and 5 percent from global gross domestic product.

Tags

regulation, anti-corruption, enforcement, fcpa

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