December 9, 2010
Monique Perry Danziger, +1 202 293 0740 ext. 222
New U.S. and UK Laws, Multi-Lateral Actions Represent Significant Gains, but Challenges Still Exist
WASHINGTON, DC – In October 2003 the United Nations General Assembly adopted the UN Convention Against Corruption (UNCAC) and designated December 9th as International Anti-Corruption Day. Global Financial Integrity looks back on the past year to see how anti-corruption efforts fared.
United States Passes Legislation Creating Greater Transparency in the Extractive Industries: Section 1504 of the Dodd–Frank Wall Street Reform and Consumer Protection Act (signed into law by President Obama in July) will require enhanced reporting by oil, gas, and mineral companies registered with the United States Securities and Exchange Commission (SEC). The increased reporting of payments to foreign governments by extractive industries companies will shed light on transactions involving billions of dollars and help prevent corrupt government officials from pocketing bribes or embezzling national wealth.
UK Bribery Act of 2010: The UK Bribery Act of 2010 reforms existing UK criminal law to provide an updated and more comprehensive approach to bribery offences to enable courts and prosecutors to respond more effectively to bribery at home and abroad. Passed in February, the law is expected to come into force by April 2011.
G20 Tackles Corruption: At its last meeting of 2010 in Seoul, the G20 adopted an ambitious and comprehensive multi-year anti-corruption action plan.
The World Bank’s Corruption Hunters Alliance: The World Bank called for a strengthened global alliance to fight corruption Monday, December 6th at a gathering of more than 250 corruption fighters, including attorney generals and heads of corruption agencies from 134 countries. The “Corruption Hunters Alliance” is tasked with establishing and helping enforce a global mechanism to track major corruption cases and bring more individual and corporate entities to account for fraud, bribery, and other corrupt acts.
Major Senate Investigation into PEPs: In February, the U.S. Senate Permanent Subcommittee on Investigations held a hearing to review the finding of a major investigation into the U.S. Politically Exposed Persons (PEPs) rules with a focus on keeping corrupt foreign money from entering the U.S. Consisting of four case histories, the Senate investigation and hearing showed how some PEPs used U.S. lawyers, realtors, escrow agents, lobbyists, bankers, and others to circumvent U.S. anti-money laundering and anti-corruption safeguards.
Financial Action Taskforce Weighs-In: In its proposals to update its 40+9 recommendations for combating money laundering and terrorist financing, the Financial Action Taskforce proposed a recommendation that countries to sign and ratify the UN Convention Against Corruption (UNCAC).
New Guidelines for Lawyers: The American Bar Association published new ethical guidelines over the summer bringing lawyers into the fight against money laundering.
Overall, 2010 featured promising action and an overall strong focus on anti-corruption work by the U.S., UK, G20, and private sector entities. There still remain some significant challenges to anti-corruption efforts.
Devil is in the Details: Detailed provisions coming out of the SEC rule-making process will better define the breadth, scope, and overall effectiveness of Section 1504 of the Dodd-Frank legislation. Despite being signed into law, major room for redefinition exists in the rule-making process and proponents of the law are working to prevent a weakening of the legislation. SEC is expected to issue the regulations by April 2011.
U.S. Chamber of Commerce Attacks Flagship U.S. Anti-Corruption Legislation: In a recently published white paper, “Restoring Balance,” the U.S. Chamber of Commerce has proposed an amendment to weaken the U.S. Foreign Corrupt Practices Act (FCPA), the U.S’ definitive anti-corruption legislation upon which all international anti-corruption initiatives are based.
Congressional Speculation: Congress convened a hearing to look at enforcement imbalances under the FCPA, creating speculation that amendments to the existing law could be proposed next year.
Enforcement: Enforcement of anti-corruption measures remains a challenge. Anti-corruption laws, including the FCPA, UNCAC, and the UK Bribery Law will only be as effective as the rate of compliance. Multi-lateral action and increased transparency in the global financial system are key to ensuring that these laws are effectively implemented and enforced.