On April 14, 2022, FinCEN issued an advisory on kleptocracy and foreign public corruption, urging financial institutions to focus their efforts on detecting the proceeds of foreign public corruption, which is a priority for the U.S. government.. The advisory provides typologies and potential indicators of kleptocracy and other forms of foreign public corruption, namely bribery, embezzlement, extortion, and the misappropriation of public assets.
The advisory highlights financial red flag indicators to assist financial institutions in preventing, detecting, and reporting suspicious transactions associated with kleptocracy and foreign public corruption. Few of the red flags cited in the Advisory include:
Transactions involving long-term government contracts consistently awarded to the same legal entity or entities;
Transactions involving official embassy or foreign government business conducted through personal accounts;
Transactions involving public officials related to high-value assets, such as real estate or other luxury goods;
Use of third parties to shield the identity of foreign public officials seeking to hide the origin or ownership of funds, for example, to hide the purchase or sale of real estate; and
Transactions involving payments that do not match the total amounts set out in the underlying documentation.
For purposes of suspicious activity reporting, financial institutions should consider the relevant facts and circumstances of each transaction, in keeping with their risk-based approach to compliance.
Read FinCEN’s full release here.
The FinCEN Advisory can be found here.