Corrupt African millionaires who hide money in real estate to be exposed in U.S. as Biden administration identifies five pillars to fight transnational corruption

Corrupt African millionaires who move their stolen money into the United States financial system hiding it in real estate may soon find it more difficult to disguise their loot after the Biden administration on Monday released the first-ever U.S. Government Strategy on Countering Corruption following a 200-day review to identify how the U.S. can fight corruption at home and abroad.

More broadly, the review was meant to identify how the U.S. government can amplify, expand, and enhance ongoing efforts to prevent corruption, better hold corrupt actors accountable, curb illicit finance, and strengthen the capacity of investigative journalists and other members of civil society who are on the frontlines of shining a spotlight on corrupt acts and actors.

It followed the establishment last June by President Joseph R. Biden Jr. of the first-ever National Security Study Memorandum (NSSM-1) titled, “on the Fight Against Corruption.” By that memorandum, President Biden established combatting corruption as a core U.S national security interest.

“The strategy places particular emphasis on better understanding and responding to the transnational dimensions of corruption, including by taking meaningful steps to reduce the ability of corrupt actors to use the U.S. and international financial systems to launder the proceeds of their acts,” a senior administration official told reporters during a teleconference on Sunday, December 5.

The official added that to guide implementation, the strategy organizes U.S. government efforts to fight corruption under five mutually reinforcing pillars. 

The five pillars are

1. Modernizing, coordinating, and resourcing U.S. government efforts to fight corruption

2. Curbing illicit finance

3. Holding corrupt actors accountable

4. Preserving and strengthening the multilateral anti-corruption architecture

5. Improving diplomatic engagement and leveraging foreign assistance resources to achieve U.S. anticorruption policy goals 

The official noted that notwithstanding the U.S.’s historical leadership in the global fight against corruption through tools like the Foreign Corrupt Practices Act, the strategy identifies a number of areas where the U.S. government can improve upon its ongoing efforts through the new documents implementation. 

Explaining each pillar, the senior administration official said, “So, first, we’re going to strive to better understand and respond to the transnational dimensions of corruption, as I mentioned, including by increasing intelligence and diplomatic resources that are devoted to the topic.
 
“Second, the U.S. government is going to take meaningful steps to reduce the ability of corrupt actors to use the U.S. and international financial systems to launder the proceeds of their corrupt acts. And I’ll come back to that in a second.
 
“Third, the strategy commits to deepening coordination with foreign partner governments to strengthen their ability to pursue accountability for corruption where there is political will, while also deepening support to activists and investigative journalists on the frontlines of exposing corrupt acts.
 
“Fourth, across the federal government, we’ll be elevating our anti-corruption work as a cross-cutting priority through the creation of senior positions and/or coordinating bodies at key departments and agencies including at the Departments of State, Treasury, and Commerce and USAID.
 
“And fifth, we’re committed to improving corruption-related risk analysis in our provision of foreign and security sector assistance. 
 
“So, for example, the Department of Defense is committing, through this strategy, to strengthening its planning processes to include more deliberate considerations of security sector governance prior to the provision of assistance and to conduct more frequent security cooperation evaluations in countries with significant risks of corruption to determine the effectiveness of security cooperation efforts.”

“And on the foreign assistance side, in addition to pursuing a substantial expansion in programming that directly focuses on anti-corruption work, relevant departments and agencies led by USAID are going to commit, through the strategy, to better assessing and addressing corruption risk across all U.S. development and humanitarian assistance. 
 
“And then, lastly, the strategy is also going to announce major new investments, as I referenced earlier, in anti-corruption programming, including a global accountability program focused on strengthening, again, so-called strategic corruption; a grand challenge that’s focused on spurring innovation and preventing corruption in high-risk sectors like construction and transportation and natural resource extraction; and in Department of State and DOJ — Department of Justice — rapid response capabilities, which will enable the U.S. government to deploy expert advisors to consult with, mentor, and assist foreign anti-corruption partners around the world where there’s

A second senior administration official provided more details on how the U.S. Financial Crimes Enforcement Network (FinCEN) will be used to fight corruption at home and abroad.

The official said FinCEN, a bureau within the Treasury Department and a regulator that works to safeguard the financial system from illicit use and money laundering, as well as also promote national security, provides law enforcement and policy makers with strategic analyses of domestic and worldwide trends and patterns around illicit finance. 

Fighting corruption within America’s real estate.

Real estate is a big conduit for corruption, especially corrupt African millionaires and billionaires who move their lotted funds into the United States and hide them by buying houses and other properties and then renting them.

Officially, the said houses and properties may not be in their own names. They use shell companies, inactive companies used as vehicles for various financial maneuvers or kept dormant for future use in some other capacities.

But the second senior administration official told reporters that hiding money in real estate may be made more difficult with the new document released on Monday.

The official said, “You’re already probably familiar with Treasury’s tools to expose and target corrupt actors, for example, by condemning and holding accountable drug kingpins, kleptocrats, and corrupt officials through sanctions designations by OFAC, through more robust tax enforcement, and through the sharing of financial data to advance prosecutions by DOJ. But our tools also strengthen the rule of law, making it harder for corruption to occur and for corrupt actors to exploit the financial system to hide and to benefit from their ill-gotten gains.”

“We can do this through international partnerships. For example, Treasury provides technical assistance to other countries to improve their financial governance. And we work with international institutions on enhancing their lending and transparency standards. That can also mean addressing the domestic nexus for corruption. For too long.

The senior administration official noted that the U.S. real estate market has been susceptible to being manipulated and used as a haven for the laundered proceeds of illicit activity, including corruption. 

“Our real estate market is a relatively stable store of value. It can be opaque, and there are gaps in industry regulation,” the official said.

“As a result, criminals and corrupt officials are able to exploit real estate far too often. Take but one example: After corrupt officials and their associates embezzled more than $4.5 billion belonging to Malaysia’s investment development fund, 1MDB, these perpetrators used the embezzled funds for, among other things, purchases of luxury homes in Beverly Hills and New York through shell companies. 

“Increasing transparency in the real estate sector will help curb the ability of corrupt officials and criminals to launder their proceeds of their illicit activities. And it will also strengthen both U.S. national security and help to protect the integrity of the U.S. financial system.

“Put another way, FinCEN is launching a regulatory process. We’re hoping to close gaps in the real estate reporting by seeking comment on how to best to craft a new rule.
 
“And more specifically, we’re considering how best to address the problems created by an all-cash purchases in the commercial and residential real estate sector. These types of purchases are often conducted through opaque shell companies and are vehicles for laundering illicit funds. 
 
“We’re basically asking for public input on which types of real estate purchases should be covered in any future regulation, what information should be reported and retained, the geographic scope of such a requirement, the appropriate reporting dollar-value threshold, and the key players who should be subject to the reporting and recordkeeping requirements.”

Read a joint opinion article by Janet L. Yellen and Samantha Power: To uphold democracy, the U.S. must fight global corruption. It was published in The Washington Post.

Just a 30-minute drive from the White House is another estate — a six-bedroom, nine-bathroom mansion outfitted with a movie theater and a seven-car garage. When the home was purchased in 2010, it wasn’t immediately clear who the new owner was. The purchase, according to a civil forfeiture complaint, was made via private trust.

It was only years later that the public learned the buyers behind the trust were Yahya Jammeh, the former president of Gambia, and his wife. Jammeh fled Gambia after committing serious human rights violations and embezzling millions of dollars from his people. He allegedly transformed a portion of that stolen money into several thousand square feet of Potomac, Md., real estate.

Around the world, in countries as varied as Russia, Venezuela and China, the wealthy and the well-connected launder their assets through complex networks of shell companies or transactions involving art, real estate and, occasionally, cryptocurrencies. Sometimes those gains are ill-gotten and sometimes they are legitimately earned but illicitly hidden to evade taxes. But what links all corrupt acts is that they take resources from citizens, undermine public trust and — ultimately — threaten the progress of those who fight for democracy.

This week, representatives of more than 100 nations will gather virtually for President Biden’s Summit for Democracy. The gathering is a recognition that the world’s democracies need a new strategy. For the past 15 years, the number of people living under authoritarian regimes has been rising, while leaders of many democratic countries have been chipping away at fundamental rights and checks and balances.

Corruption has made this possible. Autocrats use public wealth to maintain their grip on power, while in democracies, corruption rots free societies from within. Unchecked conflicts of interest and the unequal application of the law erode our trust in common institutions.

The same kleptocrat that the U.S. Agency for International Development helps expose abroad often tries to funnel his money into domestic markets overseen by the U.S. treasury. Indeed, corrupt actors hide their money in the United States all the time. We can no longer provide them a shadow under which to operate.

Combating corruption abroad, therefore, begins at home, and our first step must be to expose the owners of shell companies and other illicit funds. Moving forward, the U.S. government will require many U.S. and foreign companies to report their true owners to the Treasury and to update us when they change hands. We’re also working toward new reporting requirements for real estate transactions and will be enlisting other nations to address these issues.

Second, the United States must be a model for the wider world. The idea of democracy is inseparable from the idea of America, and we cannot support free government abroad if our institutions wither at home. But that is what’s happening.

Last year, for example, more than $600 billion was effectively withheld from U.S. taxpayers disproportionately coming from top earners and large corporations, who take advantage of our broken tax system and get away with evasion. Obviously, there’s a difference between a tax evader and an autocrat who drains the public treasury, but the financial implications are the same. The Treasury needs more resources, including more auditors, to go after evasion, and provisions in the Build Back Better Act will help us do that.

Of course, combating corruption also requires significant efforts abroad, so the United States will deepen and expand support for those fighting kleptocrats and bad actors through a new anti-corruption response fund. In the Dominican Republic, Moldova and Zambia, we’ve seen politicians win landslide victories by running on anti-corruption platforms. We want to support their reforms.

The United States is also increasing its support to media organizations and other watchdogs who risk their lives to expose corruption. These brave activists often play the greatest role in bringing down dictatorships, because while corruption may fuel autocracies, it can also be their Achilles’ heel. In 2019, a record year for global mass protests, roughly half were driven by exposed corruption, six of which led to changes in government.

We will also seek to protect international journalists from lawsuits — the latest tactics of oligarchs and autocrats seeking to suppress stories exposing corruption. USAID is launching a global Defamation Defense Fund to offer journalists coverage to survive defamation claims and deter suits in the first place.

Finally, because the government doesn’t have a monopoly on good ideas, USAID will work with civil-society and private-sector partners to crowdsource new tools and technologies to stop corrupt officials from plundering their countries’ resources and transferring them across borders.

These steps, part of the new U.S. Strategy on Countering Corruption, will embolden good-government activists, shine a light on dark corners of the global financial system, bring in more tax dollars for the public benefit and prevent criminals from laundering money through the U.S. and international financial systems.

There may always be some level of corruption, public officials on the take or illicit dollars flowing through our economy. But to uphold democracy, we must strive to make those acts difficult and rare — not easy and common.

Below is a factsheet on U.S. Strategy on Countering Corruption as released by the White House.

“Corruption threatens United States national security, economic equity, global anti-poverty and development efforts, and democracy itself.  But by effectively preventing and countering corruption and demonstrating the advantages of transparent and accountable governance, we can secure a critical advantage for the United States and other democracies.”
                                                              President Joe Biden
June 3, 2021

Corruption is a cancer within the body of societies—a disease that eats at public trust and the ability of governments to deliver for their citizens. The deleterious effects of corruption impact nearly all aspects of society. It exacerbates social, political, and economic inequality and polarization; impedes the ability of states to respond to public health crises or to deliver quality education; degrades the business environment and economic opportunity; drives conflict; and undermines faith in government. Those that abuse positions of power for private gain steal not just material wealth, but human dignity and welfare.

Recognizing corruption’s ability to corrode democracy, on June 3, 2021, President Biden established the fight against corruption as a core U.S. national security interest. Accordingly, he directed his national security team to lead the creation of a comprehensive strategy that, when implemented, would improve the U.S. Government’s ability to prevent corruption, more effectively combat illicit finance, better hold corrupt actors accountable, and strengthen the capacity of activists, investigative journalists, and others on the front lines of exposing corrupt acts. 

Today, in line with the President’s direction, the Biden-Harris Administration is releasing the first-ever United States Strategy on Countering Corruption. The Strategy outlines a whole-of-government approach to elevating the fight against corruption. It places particular emphasis on better understanding and responding to the threat’s transnational dimensions, including by taking additional steps to reduce the ability of corrupt actors to use the U.S. and international financial systems to hide assets and launder the proceeds of corrupt acts. 

To guide implementation, the Strategy organizes U.S. Government efforts to fight corruption under five mutually-reinforcing pillars: 

Modernizing, coordinating, and resourcing U.S. Government efforts to fight corruption: While the United States has long been a leader in the global fight against corruption, addressing the threat as a national security imperative requires an updated approach. This will include:

• Better understanding and responding to the transnational dimensions of corruption, including by prioritizing intelligence collection and analysis on corrupt actors and their networks.
   
• Elevating anti-corruption work as a cross-cutting priority in key departments and agencies across the federal government, including through coordinating bodies at the Departments of State, Treasury, and Commerce, and the U.S. Agency for International Development (USAID).
• Increasing law enforcement resources and bolstering information sharing between the intelligence community and law enforcement.

Curbing illicit finance: Corrupt actors and their facilitators rely on vulnerabilities in the United States and international financial systems to obscure ownership of assets and launder the proceeds of their illicit activities.  As the world’s largest economy, the United States bears responsibility to address gaps in our own regulatory system and work with our allies and partners to do the same.  This means addressing deficiencies, including by:

• Issuing beneficial ownership transparency regulations that help identify bad actors hiding behind opaque corporate structures.
   
• Enacting first-of-their-kind regulations that target those closest to real estate transactions to reveal when real estate is used to hide ill-gotten cash or to launder criminal proceeds.
   
• Working with the Congress and within existing regulations to make it harder for certain gatekeepers to the financial system – including lawyers, accountants, and trust and company service providers – to evade scrutiny.
   
• Working with partner countries through multilateral fora, diplomatic engagement, law enforcement cooperation, and capacity building to strengthen their anti-money laundering regimes to bring greater transparency to the international financial system.

Holding Corrupt Actors Accountable: While the U.S. Government shores up regulatory gaps and works with partners and allies to do the same, we will also hold accountable those who choose to engage in corruption, including by:

• Elevating diplomatic and development efforts to support, defend, and protect civil society and media actors, including investigative journalists who expose corruption.
   
• Launching a new initiative to engage partner countries on detecting and disrupting foreign bribery.
   
• Establishing a kleptocracy asset recovery rewards program that will enhance the U.S. Government’s ability to identify and recover stolen assets linked to foreign government corruption that are held at U.S. financial institutions.
   
• Working with the private sector to improve the international business climate by encouraging the adoption and enforcement of anti-corruption compliance programs by U.S. and international companies.

Preserving and strengthening the multilateral anti-corruption architecture: The U.S. Government is committed to strengthening the international anti-corruption architecture, which includes multilateral initiatives, commitments, and standards that push countries to make real improvements in countering corruption.  The United States will continue to preserve and strengthen this vital architecture, including by:

• Working with the G7 and G20 to implement strong transparency and anti-corruption measures across ministerial tracks.
   
• Building and expanding accountable, effective, and resilient security institutions to target corruption in finance, acquisition, and human resources functions.
   
• Reinvigorating U.S. participation across a number of initiatives, including the Open Government Partnership and Extractive Industries Transparency Initiative.

Improving diplomatic engagement and leveraging foreign assistance resources to achieve anti-corruption policy goals: Diplomatic engagement and foreign assistance, including security assistance, are vital to the United States’ efforts to counter corruption.  Taken together, these efforts can bolster partner governments’ capacity and will to counter corruption, and support civil society and others engaged in advocacy and action.  To safeguard assistance dollars from inadvertently supporting corrupt actors, the United States will improve its risk management processes and better understand local political, economic, and social dynamics.  The United States will therefore expand and enhance its efforts, including by:

• Elevating anti-corruption work as a priority within its diplomatic efforts.  
   
• Reviewing and re-evaluating criteria for government-to-government assistance, including around transparency and accountability.

• Expanding anti-corruption focused U.S. assistance, and monitoring the efficacy of this assistance.
   
• Building additional flexibility into anti-corruption initiatives and broader assistance efforts to respond to unexpected situations worldwide.
   
• Bolstering public sector anti-corruption capacity and support, including to independent audit and oversight institutions.

The United States Strategy on Countering Corruption marks a new chapter in the United States’ efforts to curb corruption’s harmful effects.  As accountability is vital, Federal departments and agencies will report annually to the President on progress made against the Strategy’s objectives.