This Week in AML

OECD Phase 4 Report on US Anti-corruption Efforts

This week, Executive Vice President John Byrne, and Creative Director Elliot Berman of the AML RightSource staff talk about the report issued by the Organization for Co-operation and Economic Development (OECD) on the efforts by the United States to combat bribery of foreign elected officials in international business transactions. During the conversation John and Elliot discuss the recommendations in the report and the importance of US actions in this critical area.


OECD Phase 4 Report on US Anti-corruption Efforts Transcript

Elliot Berman: [00:00:00] John, how are you this week?

John Byrne: [00:00:01] Hi, Elliot. How are you doing?

Elliot Berman: [00:00:03] I'm a little under the weather, but I'll be fine. So this week, I saw that the organization for economic cooperation development, OECD, which is an international organization, deals with a lot of different things, including trying to combat corruption related to public officials in Turkey and international business transactions. They have been since 1999 or so, having countries implement a process by which, the countries adhere to a set of guidelines in terms of their own enforcement and management of, international corruption.

And, just last month they announced their working group approved the phase four review of the United States, and at first I wondered if you saw that?

John Byrne: [00:00:59] Yeah, I did, and one of the things that we as AML professionals know intuitively, but we don't always focus on is the elements of corruption that are covered by the foreign corrupt practices act, which as we both know, have been around since the late seventies.

And I know there's been some issues back and forth over the past number of decades that maybe it wasn't getting enforced as much, and, maybe there needs to be a reemphasis, but this clearly shows that there has been a continuing emphasis by the US on foreign bribery and a utilization of the FCPA.

So I think that's an important adjacency to money laundering because obviously part of the reason why you move illegal funds is to commit corrupt activities.

Elliot Berman: [00:01:44] Right. And actually, in the early part of the report, the writers of the report do note that, money-laundering and other financial crimes are often predicate to the actual violation of the corruption statutes.

What they did here is they came up with a series of recommendations, which is standard, as they'd done with the prior reports and, do you want to, take us through, kind of at a high level, what those recommendations are?

John Byrne: [00:02:15] Yeah, so the recommendations were to develop ways to enhance protection for whistleblowers, those that report, anti-bribery violations. And I think that's a really important because we've seen a lot of reporting on whistleblowing activity, certainly in the past couple of years here in the US, and abroad. And they do need that protection so that they're free to report on potential illegal acts and then to further evaluate guidance about it.

So the better explained to companies and entities, what their requirements are under the FCPA, becomes pretty important, and certainly beyond banks. And then, in terms of transparency to make available, to make public:

  • completion of non-prosecution agreements and deferred prosecution agreements in foreign bribery matters - that's really important,
  • to look at, corporate enforcement policies that encourage self-disclosure and make sure that it is both understandable and readily attainable,
  • and to address recidivism - through sanctions and raise awareness.

And recidivism is something that we deal with in the AML space all the time. If an examiner and examination criticize an institution and then finds a subsequent violation of the same activity you're going to hit pretty hard. So, using that same theme here, that certainly makes a lot of sense.

Elliot Berman: [00:03:33] Yes, I agree. As I understand, OECD's methodology for this kind of stuff, two years from now, the, US will be required to issue a report to the OECD working group, about their progress on implementation of the recommendations and then, they'll in the future - and I don't know exactly when this will bethere'll be another visit, onsite visit, to, see how we're doing. And of course, through time, OECD has continued to update and revise their convention or guidance, on this kind of corruption.

John Byrne: [00:04:11] Right - and this is available on their website, so take a look at that when you get a chance this is United States' phase four report.

Elliot Berman: [00:04:18] Yeah. All right, John, be well this week.

John Byrne: [00:04:21] Take care and have a great Thanksgiving. Talk to you soon.

Elliot Berman: [00:04:25] Yep, bye bye.