Biden Expected to Put the World’s Kleptocrats on Notice

The U.S. president-elect and his top advisors have made the fight against dirty money one of their early priorities.

By , a national security and intelligence reporter at Foreign Policy.
U.S. President-elect Joe Biden
President-elect Joe Biden speaks during a virtual meeting with the United States Conference of Mayors in Wilmington, Delaware, on Nov. 23. Mark Makela/Getty Images

U.S. President-elect Joe Biden is expected to make a crackdown on illicit finance both at home in the United States and abroad a centerpiece of his administration, a move that could have profound implications for anti-corruption efforts around the globe.

Biden, who as vice president spearheaded the Obama administration’s fight against corruption and kleptocracy, has repeatedly vowed to make it a focus as president. Two years ago, Biden and his former advisor Michael Carpenter warned in Politico about the threat posed by foreign money of unknown origins to the integrity of U.S. elections. He echoed those concerns in a Foreign Affairs essay this spring.

“I will lead efforts internationally to bring transparency to the global financial system, go after illicit tax havens, seize stolen assets, and make it more difficult for leaders who steal from their people to hide behind anonymous front companies,” he wrote. And Biden’s pick for national security advisor, Jake Sullivan, told Politico that one of his chief goals was to “rally our allies to combat corruption and kleptocracy, and to hold systems of authoritarian capitalism accountable for greater transparency and participation in a rules-based system.”

A transition official said that “President-elect Biden made countering corruption at home and around the world a staple of his agenda.”

“It’s going to be absolutely essential for the next administration. I think they have a broad agenda to tackle corruption and kleptocracy,” said Carpenter, now managing director of the Penn Biden Center for Diplomacy and Global Engagement.

And the prospects look promising, since cracking down on corruption and improving financial transparency enjoy support from both sides of the aisle—no small matter with Republicans likely to maintain control of the Senate.

Legislation that would create a beneficial ownership register—which would make it much harder to register anonymous shell companies in the United States—has been included in the National Defense Authorization Act, alongside a slate of other anti-corruption legislation. The United States is one of the last remaining advanced economies that continues to allow for the creation of anonymous shell companies, the likes of which have been enabled human trafficking, terrorism, and sanctions evasion. At present, more stringent identity checks are required to obtain a library card than to open a shell company in every U.S. state. 

“You have the national security community as interested in these issues as the anti-poverty community,” said Gary Kalman, the Director of Transparency International U.S.

Estimates of the cost of corruption to the global economy range from $1 trillion to $2.6 trillion annually, much of it coming from the developing world. If even a fraction of that money were caught and kept in its country of origin each year by anti-corruption efforts, it would far outstrip development assistance spending, which in 2018 hit almost $166 billion worldwide.

“You would literally change the economics of global poverty,” Kalman said. 

There’s a national security case, too. Over the past decade authoritarian regimes, principally Russia and China, have spent $300 million—much of it by exploiting legal loopholes—to influence the politics of dozens of countries around the world, according to a report released earlier this year by the German Marshall Fund. 

“It also pushes back on countries like Russia and China that use our very porous and opaque system to first and foremost park their money in the U.S. where it’s safer but then even at times to use that for influence inside our country,” said Michael McFaul, who served as U.S. ambassador to Russia during the Obama administration.

Sullivan’s emphasis on working alongside allies is likely to find a ready reception, especially in other major banking and economic hubs. “The U.K. is absolutely desperate to start working more closely with the U.S. on this,” said Nate Sibley, a research fellow for the Hudson Institute’s Kleptocracy Initiative. “That’s the two major global financial centers.”

Biden has also outlined his intention to make international commitments to combat corruption a core tenet of the global summit of democracies that he pledged to host during his first year in office.

“This needs to be injected, mainstreamed if you will, into all of our multilateral engagements,” Carpenter said. 

Biden’s expected focus on fighting financial opacity and corruption is a carry-over from his previous stint as vice president, when he was even more aggressive than President Barack Obama, according to Kalman. “This is not just a new thing you’re hearing from the campaign. This has been a passion of Biden’s for years,” he said. 

Biden oversaw U.S. policy toward Ukraine as the country charted a rocky but ambitious path of reforms in the wake of the 2014 revolution, and he leaned heavily on the country’s then-President Petro Poroshenko to clean up corruption. Biden went as far as threatening to withhold $1 billion in U.S. aid to persuade the Ukrainians to oust the country’s notoriously corrupt prosecutor general Viktor Shokin. (That effort, which had broad support from the U.S. government, the European Union, and the International Monetary Fund, was later used against Biden by Republicans during the 2020 presidential campaign.)

In Central America, Biden spearheaded a $750 million aid package intended to address the root causes of refugee and migrant flows, making much of the funds contingent on anti-corruption efforts, and he leaned on the former president of Guatemala to extend the work of a pioneering U.N.-backed anti-corruption commission. 

U.S. support for the commission was kneecapped during the Trump administration as President Donald Trump sought Guatemalan support for policies key to his reelection bid. The Biden team’s plan for Central America promises to put “combating corruption at the heart of U.S. policy in Central America.”

Amy Mackinnon is a national security and intelligence reporter at Foreign Policy. Twitter: @ak_mack