US Anti-Corruption Strategy, Democracy Summit Could Lead to Coordinated Magnitsky Sanctions
The U.S.’s new anti-corruption strategy, coupled with its democracy summit later this week, could convince more allies to adopt Global Magnitsky sanctions regimes, former U.S. officials said. They said the administration’s plans to pursue more multilateral sanctions and trade restrictions at the summit could build a more united front to address global corruption and human rights abuses.
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“I was glad to see the strategy highlight the power of targeted sanctions,” Adam Szubin, a former senior Treasury official, said during a Dec. 7 event hosted by the Atlantic Council. “The strategy notes the importance of other countries following suit and … I really hope that trend continues.”
Although the U.S. won’t use an official enforcement mechanism to ensure allies adhere to any new export control or sanctions announcements expected during the democracy summit later this week, they do hope to hold another summit next year to review their progress, senior administration officials told reporters Dec. 7. They said they will work with the other governments invited to the summit to “ensure that they make their commitments public” and that “leaders follow through on the commitments they make.”
Two of those initiatives involve more cooperation on anti-corruption work and improved export restrictions surrounding surveillance technologies and other dual-use items used by authoritarian governments (see 2112020073), the official said. The official called the export restrictions a “new effort to work with like-minded partners to better protect dual-use technologies that can be used to violate human rights,” and said both efforts will lead to more collaboration, including at multilateral export control regimes. ”I think you'll see a number of new work channels that will be established,” the official said, “and we'll be able to follow up over the course of the year.”
Mary Beth Goodman, a former National Security Council official, hopes the U.S. and allies can eventually build a “coordinated effort” on Global Magnitsky sanctions. “We've got some countries that look at this from a corruption perspective, some that look at it from a human rights perspective,” Goodman said during the Atlantic Council event. “Not many outside of the U.S. look at both.”
She hopes Democracies can reach a place where each can impose its own set of Magnitsky sanctions “based on the same evidentiary basis” that another country uses. “That would be a dream,” Goodman said. “You could have Global Magnitsky, and have it be coordinated where multiple countries are designating simultaneously.”
Global Magnitsky sanctions are “something that most democracies can get behind,” said Justyna Gudzowska, illicit financial policy director for The Sentry, a Washington-based anti-corruption group. She specifically pointed to the European Union, which she said should add a corruption rung under its human rights sanctions regime, and Japan, which has considered creating a human rights sanctions regime but hasn't yet followed through (see 2111170035).
More countries working to impose the same restrictions against the same illegal financial networks can lead to more effective sanctions, Gudzowska said. “You don't just designate someone bad, check the box, see you later,” she said. “I think this kind of sustained pressure is very critical.”
As part of its anti-corruption strategy, Gudzowska also said the U.S. should do more to hold sanctions enablers accountable. She pointed to the Enablers Act, which was introduced in the House in October and could impose stronger financial due diligence requirements on public relations firms, investment advisers, art dealers, lawyers and others that help corrupt payments avoid regulatory scrutiny (see 2111190038).
“Too many times we see people that are willing to enable the negative activity, enable corruption, and not really be subject to scrutiny,” Gudzowska said. “Financial institutions have these huge compliance programs, reporting requirements and spend all this money, but I think other professions should have to do at least a fraction of that.”
The White House’s new anti-corruption strategy references enablers, including lawyers and accountants, calling them “gatekeepers to the financial system” who may help foreign companies and people evade enforcement scrutiny. When Szubin saw that the U.S. strategy specifically named lawyers, “my eyebrows went up,” he said. “It'll be very interesting to watch what the administration is thinking in that respect.”
The White House said it plans to work with Congress to “make it harder” on those gatekeepers. “I am so often dismayed about how many lawyers, how many people in the legal profession are enabling corruption,” Gudzowska said. “I hope lawyers can take a good, long, hard look at themselves.”