This Week in AML

The Impact of Corruption on Democracy

 The White House has published a Fact Sheet: Summit for Democracy: Progress in the Year of Action. It discusses activities taken since the first Summit for Democracy, held a year ago. The White House also announced a second Summit to be held in March 2023. A key goal of the first summit was curbing corruption. John and Elliot look at the progress made on this initiative, how corruption impacts the health of democratic nations, and other actions taken in the last year.



The Impact of Corruption on Democracy TRANSCRIPT


Elliot Berman: Hi, John. How are you today?

John Byrne: I'm good, Elliot. How are you doing? I'm good too. Thank you.  

Elliot Berman: There's a lot going on as usual, but the thing I thought might be worthy of talking about is the White House put out a fact sheet related to something called Summit for Democracy, which is something that the first one was held about a year ago. Progress in the year of action. I wondered if you saw that release. 

John Byrne: Yeah, I saw it because it's relevant for a lot of reasons. But one of the things that, as we're gonna talk about toward the end of this, is that on December 15th, we're gonna be doing a very compelling conversation on corruption.

So one of the things that the summit for democracy talks about and there are many different things in there. Things on in investments, environmental issues, all sorts of issues. But also supporting free and independent media, so that's obviously always important, but so is fighting corruption.

And so they list a whole series of actions undertaken in 2022 from the US government's perspective on corruption. I thought we should let the folks know about a couple of those because, as we know, in the financial crime space, corruption begets all sorts of illicit activity cuz it's all about getting money and power, and that's certainly a way to define corruption.

Elliot Berman: Yes. Just a little background for our listeners. So there were over a hundred partner governments who participated in the original summit about a year ago. There's also an announcement that a second summit's gonna be held in March of 2023, and the US is going to be a co-host with

government officials from Costa Rica, the Netherlands, the Republic of Korea, and the Republic of Zambia. A diverse group of co-hosts. And a lot of the work we're going to talk about in a moment is from what the US has been participating in. But there are working groups and all kinds of things going on.

A lot of it is not getting a lot of press, but in many ways, the building blocks. And a lot of international cooperation, which is also, I think, very valuable in fighting corruption in particular, but in working toward making democracies healthy, vital, and stable.

John Byrne: Right. And some of the examples they used for what's happened in the past year. The State Department, July, appointed the first-ever coordinator on global anti-corruption. USAID launched something they're calling Strengthening Transparency and Accountability through Investigative Reporting.

And that's a 20-million-dollar program to support collaborative investigative journalism networks. We'll mention that again toward the end of this. Innovation becomes pretty important. That's something that we've seen the banking regulators talk about just in terms of the financial sector in general.

But looking at innovation as a way to combat corruption is also a focus here. And then they go back to something we've talked a lot about, and that's the passage of The Corporate Transparency Act.  

Elliot Berman: Right. And then registries and infrastructure to share information and all those things. When I was reading that section, I was wondering if, down the line, this leads to a global registry or a standard for national-level registries. But the standard becomes the same around the globe. That transparency is really the same wherever you are or among these participating countries. That's a long lift. I understand.

John Byrne: That's a big lift. 

Elliot Berman: I know, I know. 

John Byrne: Yeah. But it is largely because of the jurisdictional differences in privacy and other issues.

But anyway, it's certainly a worthy goal. I don't disagree. So they do point out that part of the importance of the passage of the CTA will be the ability to, besides the registry, the development of regulations is mixed issues, but in AMLA also, they're looking about dealing with real estate purchases and, and those sorts of things.

But the other thing is that. I forgot about it, but we might have mentioned this earlier. Back in March, the treasury launched the Crypto Asset Recovery Rewards Program. So that obviously pays rewards, and the treasury and state will continue to use what they're calling accountability tools in addition to recovery rewards like sanctions and visa restrictions.

But I had forgotten that they did that, but obvious. Seizing assets and making some of those assets available as rewards will help diligent people. No, they've got a place where they can provide that information, so I thought that was interesting. They do reference, as you mentioned, international successes of multilateral engagements that our government is doing with FATF.

In December, it hasn't occurred yet. I don't believe, but the international anti-corruption conference is actually going on this week in DC, if I'm not mistaken. So maybe we can report on it next week if that's, in fact, the case. I do think it's coming shortly. And if it's not this week, I think it's next week.

And that should be interesting. There should be some takeaways that we can talk about. 

Elliot Berman: Yes. And there continues to be the effort to strengthen our own work here so that we can be a good cooperative partner, which is, you know, a critical

effort. I saw a word in here. I wasn't sure I would ever see deification. 

John Byrne: Yeah, I saw that too. 

Elliot Berman: Yeah. But, you know, and I don't mean to make light of any of this, but you know, there's a lot of work. I think as I said earlier, one of the things that struck me. Is how much is going on, and you and I, who follow this space pretty actively, were aware of a fair amount of it, but there's also a fair amount that's going on where at the moment, It's not for the purpose of shining a light on it, it's for the purpose of getting the work done. 

John Byrne: Right. The last thing that they mentioned in under the corruption umbrella is holding Russia accountable, and they talked about the creation back in March by Attorney General Garland of the Task Force Klepto Capture, which is an interagency law enforcement task force designed to deal with that.

And that was created directly in response to Russia's unprovoked attack on Ukraine. So that's going on there. Going after oligarchs continues to be a priority. That's obviously important. With all these yachts and homes and condos that are owned by these individuals avoiding the law for a variety of reasons going after them and seizing those assets. So all those things have been a show. It's been a fairly strong and successful 2022, just in that part, under the democracy rubric that this was created for. But the corruption successes, I think, are pretty straightforward.

Elliot Berman: Yes. Again, we're focusing on the corruption component in this fact sheet, but there are other important efforts going on related to defending free and fair elections and inclusive political processes. And advancing technology to support democracy. And bolstering democratic reformers in those places. Where the fight to even establish democracy is still going on. 

John Byrne: And just real quick, before we talk about things we wanna plug, we had to make a tough choice about what we're gonna talk about this week. I want to highlight very quickly that the Department of Homeland Security updated its national terrorism advisory system bulletin, which was set to expire. Didn't realize the bulletins expire, but they were on the 30th. So they came out with an updated one. I would just tell folks to take a look at it. It obviously talks about all the risks of domestic and international terrorism. So we would suggest you take a look at that when you get a chance.

Elliot Berman: Yes. And one of the key components of that one is a continued focus on the domestic violence related to religious beliefs and racial profiling. So that continues to be a major focus of HSI, both in their domestic and international activities. So, John, you alluded to our December 15th webinar. Why don't you give a little more in-depth conversation about that.

John Byrne: So yeah. Under the broad definition of corruption, we are very excited to have two investigative journalists that are connected to the Organized Crime Reporting Project that do a lot of excellent work.

They worked on the Pandora papers, FinCEN files, and Panama Papers. We'll reference some of that, but we also want to talk specifically about something they've created called a Russian asset tracker. Talk a little bit about that. They'll talk about the work they did with the so-called Suisse Secrets, and we're gonna ask them their thoughts about what the EU just did in court, saying that they're gonna limit access to beneficial ownership registries.

And that's certainly something that the investigative journalism community is opposed to because they get a lot of good information from that, so they can pursue important stories based on what's in these registries so that you know that there's a debate here to a degree. The registry here was never gonna be open to the public.

But how the access was gonna work in terms of. And the private sector is also to be determined. So we're gonna ask them their thoughts on this. And also, as I always like to ask investigative journalists, what do they think, how we are doing? We being the AML community, what's their sense of how things are going?

Because obviously, it's a major challenge for all of us. So December 15th, one o'clock ET. Very excited about that. And that'll end our webinar programs for 2022. 

Elliot Berman: Yes, but we have a full schedule already in the works for 2023, and we'll start to advertise those as well. Remember, you can register for the December webinar at our website, amlrightsource.com.

So please do that. And, John, I'm looking forward to the session on the 15th. We also have some other things in the works. John's done some great interviews, and we're working on some podcasts jointly with Homeland Security Investigations about some of their current initiatives that we think are important for our listeners to know about.

So watch for those to post during the month. And we'll be back with another conversation next week. John, you be well. I think I may see you. I think you're coming my way between now and our next recording.

John Byrne: I'm coming to watch the Golden Eagles of Marquette University, who just boat-raced Baylor.

Nobody expected it. They'll be playing their in-state rivals, Wisconsin, so I can't wait. And I'm sure we'll find a chance to connect. So looking forward. I can deal with the cold as long as I'm watching college basketball. So that's okay. 

Elliot Berman: Bring your Marquette stocking cap and travel safely. 

John Byrne: All right. Take care. 

Elliot Berman: All right. Bye bye.