For Susana sierra, Executive Director of BH Compliance
The cost of corruption is so high that we cannot ignore it. Its scope is so wide and deep that if we don’t cut it short, its consequences will be even more disastrous. Today, we see how corruption undermines democracy, development, equity, economic opportunities, the protection of human rights and civil security, as well as increasing migration. In figures, it translates into a cost to the world economy of about 5% of global GDP, that is, about 2.6 trillion dollars a year, according to UN data. What else should we expect to address it strategically?
Last June, the President of the United States, Joe Biden, established the fight against corruption as a matter of national security interest, giving a period of 200 days to the departments and agencies of the country to make recommendations that would strengthen the fight. of this problem. And that deadline was met a few days ago, leading to a new strategy to combat corruption at the global level, emphasizing international cooperation. For this, he proposes to modernize, coordinate and assign more resources to this fight; demand accountability from the corrupt; among other actions.
This is in addition to other measures that the United States is applying in 2021, such as the Engel List, which includes corrupt citizens of Guatemala, Honduras and El Salvador, who are prohibited from entering that country, highlighting among them former presidents, ministers, prosecutors and even your immediate family members. On the other hand, in January 2022 the Corporate Transparency Law (CTA) should enter into force, which creates a registry of final beneficiaries of companies, and which seeks greater financial and commercial transparency to avoid crimes such as money laundering. This is of particular interest in the North American country, since as the Secretary of the Treasury, Janet Yellen explained: “there are too many dark financial zones in the United States that give shelter to corruption”, since “huge amounts of illicit money” end up in its system financial. For this reason, the focus is on demanding more transparency when reporting real estate transactions in cash and thus curbing illicit financing.
In this regard, the US concern has a clear focus: to confront corruption by affecting the reality of Latin America -especially in Central America-, where the economies are weaker, corruption is increasingly powerful, and where the proliferation of drug trafficking is wearing down their systems.
This is an alert for Latin American or transnational companies with operations in the region, since the new strategy will strengthen the Law of Corrupt Practices Abroad (FCPA), a regulation that is already quite demanding, and that will pay greater attention and sanction with greater rigor to any company involved -voluntarily or involuntarily- in acts of corruption. In this way, it is expected that the cases of application of this law will increase in an area where there has not been much progress to combat this problem.
This alert must be taken seriously, because the options of falling into the clutches of corruption can be fortuitous, particularly if a correct risk assessment and due diligence are not carried out when doing business or hiring employees, since the chances of a legal person being used for fraudulent purposes is very high.
In this, prevention and the generation of evidence in companies regarding their good practices, can be decisive in the face of any conflict, but above all it is essential that companies really get involved with honest, ethical and transparent behavior, where compliance be the heart of your business and not just the literal translation of “compliance.”
It is worth asking, then, if the United States’ anti-corruption efforts can help reduce corruption rates in Latin America, especially considering the effects that the pandemic has generated in the region. It is to be hoped that this is the case, and that both governments and the private sector will put this issue at the center of their actions, because beyond the economic damage, corruption puts something vital in check, such as democracy.
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