FinCEN advisory addresses kleptocracy and foreign public corruption

The Financial Crimes Enforcement Network (FinCEN) recently issued an advisory on kleptocracy and foreign public corruption to encourage financial institutions to focus on the detection of the proceeds of foreign public corruption, in alignment with President Biden’s 2021 memorandum that established the fight against corruption as a core national security interest.  Kleptocracies are described as governments that are led by officials who use their political power to appropriate a nation’s wealth for personal gain, usually at the expense of their citizens.  In the advisory, FinCEN identified Russia’s kleptocracy is one of particular concern because the invasion of Ukraine demonstrates how a kleptocracy with widespread corruption can harm not only its own citizens but also those in surrounding jurisdictions.

The advisory, released on April 14, 2022, describes the possible indicators of kleptocracy and foreign public corruption and the various forms they can take, including bribery, extortion, embezzlement or the misappropriation of public funds and assets that, FinCEN warns, can occur at every level government.  According to FinCEN, like other corrupt actors, kleptocrats and corrupt officials often use shell companies to conceal the true origin of the funds or launder corrupt proceeds by purchasing luxury real estate and hotels, private jets, artwork, and other high-value assets.  The advisory also identifies several financial red flag indicators of kleptocracy and foreign public corruption to enable financial institutions to detect, prevent, and report these suspicious transactions.

FinCEN also indicated that the Treasury Department, via its Kleptocracy Asset Recovery Rewards Program, is offering reward payments for information leading to the seizure or forfeiture of assets associated with foreign government corruption, and encourages anyone with information to contact Kleptocracy_Rewards@Treasury.gov or call 202-622-2050.

FinCEN Press Release | FinCEN Advisory

 
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