The State of Compliance: A Message from TRACE President Alexandra Wrage

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Even without high levels of enforcement, 2021 was an important year for anti-corruption. From creative policy solutions to collaboration through organizations like the OECD, we made significant progress toward a fairer business climate through transparency and accountability. I invite you to read my thoughts on what these recent developments mean for compliance in 2022 and beyond.

  1. Narrative shift: The words “countering corruption” are now being spoken in the same breath as “national security” at the highest echelons of power. The Biden administration’s U.S. Strategy on Countering Corruption elevates anti-corruption as a whole-of-government priority and marks a major shift in the narrative and in resource allocation. Through the Summit for Democracy and other initiatives, the U.S. government is making an effort to rally global democracies.
  2. Prioritizing ESG: Governments are clarifying their environmental, social and governance (ESG) expectations of companies. From forthcoming EU regulations to new U.S. Securities and Exchange Commission rules under development, governments are starting to ask more of companies when it comes to environmental impact transparency. And the United States just created a landmark law that flips the burden of proof onto companies doing business with Xinjiang, China, requiring them to provide evidence that their supply chains are free of forced labor. New ESG expectations will ensure that no business is unfairly punished with loss of market share for acting ethically.
  3. Cleaning up dirty money: On the heels of the Pandora Papers and other massive financial secrecy leaks, the West is finally becoming more hostile to the corrosive capital stashed within its shell companies, trusts, real estate and other assets. Its weapon of choice? Transparency. From the beneficial ownership registry signed into law on the first day of 2021 to legislative and other proposals by the Biden administration, the United States is prioritizing a massive cleanup of its financial system. Other countries are following the U.S. lead: Canada’s new anti-money laundering requirements went into effect over the summer, and Prime Minister Trudeau has directed his cabinet to implement a beneficial ownership registry. The European Commission also recently introduced a proposal to end the misuse of shell companies.
  4. A new enforcement toolbox: The United States and the UK, the two most active enforcers of anti-bribery law using extraterritorial jurisdiction, have repeatedly emphasized that they continue to have high expectations for compliance and that the pandemic is not a valid excuse for lapses in compliance with anti-bribery laws. The U.S. Department of Justice (DOJ) has surged resources to prioritize combatting corporate misconduct and provided prosecutors with an enhanced enforcement toolbox that promises tougher restrictions on leniency, ongoing monitoring of pre-trial diversion agreements, and greater scrutiny for recidivist companies even if past misconduct is not bribery-related. While the pace of enforcement has been lighter compared to 2020, the U.S. DOJ has repeatedly cited a robust pipeline of cases. The less frequent resolutions may be a result of increased transnational coordination between enforcement authorities, which tend to result in larger upper-end penalties.
    • TRACE members have access to unlimited multilingual eLearning and compliance resources.
  5. Global collaboration continues. The Organisation for Economic Co-operation and Development (OECD), following extensive review of the 2009 Recommendation, published its 2021 Anti-Bribery Recommendation last month. The United States, through the Summit for Democracy and proposed policy initiatives, promised to bring rule-of-law democracies together for ongoing collaboration and mutual support. Journalists continue to coordinate globally to report on major leaks such as the Pandora Papers. And investigative and enforcement authorities are increasingly combining their efforts to hold corrupt actors accountable.

As anti-corruption is increasingly prioritized by governments and multilateral organizations, compliance has never been more important. TRACE is here to support you as you plan and budget for 2022. TRACE members have access to unlimited multilingual eLearning courses; our members-only Resource Center including benchmarking data, training aids, local law guidance and more; webinars and global events; discounts on professional partner services and more. Learn more about membership or contact TRACE.