Executive summary
The Biden administration recently announced its new corporate enforcement agenda with statements from high-ranking officials that the DOJ is “redoubl[ing]” its commitment to corporate enforcement and “building up to surge resources” in the coming year. In a June 2021 memorandum, the administration made clear that anti-bribery and corruption (ABC) and anti-money laundering (AML) are not just priorities – they are “core national security interest[s]." Boards should be aware of these new enforcement strategies and objectives, including regulations that implement the 2020 Anti-Money Laundering Act (AMLA), which marks the most significant expansion of AML laws in two decades.
President aims to supercharge anti-bribery enforcement
In the ABC arena, recent years have featured record-setting penalties under the Foreign Corrupt Practices Act (FCPA), including a $1.66bn penalty involving Goldman Sachs in October 2020. President Biden’s memorandum aims to supercharge enforcement through greater domestic intelligence sharing and international cooperation, including the G7-created Financial Action Task Force, with a focus on countries like China, Russia, and Venezuela that fall under the DOJ’s Kleptocracy Asset Recovery Initiative. At the time of the memorandum’s release, the acting head of the DOJ Criminal Division explained that it was developing FCPA cases “as much, if not more” through “proactive and innovative” methods, such as data mining, and predicted “an increase in DOJ-driven FCPA investigations before the end of the year.”
Money laundering strategy targets “demand side of bribery”
In the AML arena, President Biden’s memorandum also targets the “demand side of bribery” and calls for robust implementation of the AMLA, which expands subpoena powers, whistleblower incentives, and penalty schedules in the Bank Secrecy Act. As part of that process, in June 2021, the Financial Crimes Enforcement Network (FinCEN) released new priorities to address “longstanding threats” like fraud and corruption and “rapidly evolving and acute threats” like domestic terrorism and illicit cryptocurrency transactions. President Biden’s memorandum calls on the private sector to serve as a “partner,” and the FinCEN Priorities specify that banks and financial institutions are “uniquely positioned to observe [and report] suspicious activity that results from cybercrime.” In December 2021, FinCEN will propose AMLA-related regulations.
Key takeaways for boards
This is a critical time for boards to reevaluate their ABC and AML compliance programs.
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Boards should take reasonable steps to align ABC programs with revised DOJ expectations in the June 2020 Guidance on the Evaluation of Corporate Compliance Programs and the July 2020 FCPA Resource Guide, including the importance of “investigation, analysis, and remediation.”
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They should also take reasonable steps to align AML programs with the emerging risks highlighted in the FinCEN Priorities, including illicit transactions related to cybercrime and domestic terrorism. In doing so, boards should consider strategies to engage with regulators when such issues arise.
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Finally, boards should take reasonable steps to confirm that compliance programs operate effectively, and as they are designed to do, in a post-COVID-19 era. Amid changing working conditions, compliance teams may need to update risk profiles, pressure-test programs, and adapt employee guidance for new operating paradigms. For example, when employees are working remotely, are new tools required to communicate the appropriate “tone from the top” and reinforce the company’s commitment to achieving results the right way? And with the increasing trend of employees using personal devices, and the corresponding increased use of WhatsApp and WeChat (and similar applications) as opposed to corporate email, do companies need to develop new strategies to engage in appropriate surveillance and monitoring, mindful of course of data privacy law restrictions? The challenges have never been greater, at the same moment that DOJ has announced an intention to increase the penalties when things go wrong.
As US government agencies implement these new strategies and objectives, Freshfields will continue to provide updates and analysis through its Risk and compliance publications.