FinCen put out an advisory regarding kleptocracy and foreign public corruption.
The consequences of foreign public corruption transcend borders and affect countries far beyond the state of origin. This form of corruption, or abuse of power, may disrupt another country’s financial systems, its markets, cast doubt on its institutions, and violate U.S. law.
A kleptocracy is a government led by officials who primarily seek personal, monetary gain usually at the expense of their population. Kleptocrats may engage in bribery, misappropriation of public funds, and embezzlement schemes which spill into the U.S. and other nations through the use of offshore accounts and money laundering.
Indicators of Potential Foreign Public Corruption
- Transactions between state-owned companies and companies registered in high-risk jurisdictions.
- Transactions between personal accounts and foreign embassies.
- Purchases of high-value assets by a public official outside of their normal behavior.
- Documents, such as invoices, that demonstrate substantially higher prices than market rates or overly vague language.
- Assets in the name of intermediate legal entities that are connected with a kleptocrat or their family members.
Classification of Kleptocracy and Foreign Public Corruption
- Wealth Extraction: bribery, extortion, misappropriation, and embezzlement of public assets schemes related to the U.S. may be prosecuted under the Foreign Corrupt Practices Act (FCPA).
- Laundering Illicit Funds: shell companies, offshore financial accounts established in foreign jurisdictions, and purchase of high-value assets.
Blowing the Whistle on Foreign Public Corruption
- A financial institution must file a Suspicious Activity Report (SAR) and may need to submit other Bank Secrecy Act (BSA) reporting requirements.
- If an individual has information regarding a possible foreign public corruption scheme, they may be eligible for protection under the U.S. Treasury Department’s Kleptocracy Asset Recovery Rewards Program.
Whistleblowers seeking legal advice may contact Kohn, Kohn & Colapinto for a consultation.
