Kroll Institute Newsletter – June Edition

The Kroll Institute newsletter opens the lens of Kroll Institute Fellows on topics related risk mitigation, good governance and transparency. Here’s what our Fellows think you should be paying attention to this month.

The Biden Administration’s Focus on Transparency

Jordan Strauss, Kroll Institute Fellow, Managing Director, Forensic Investigations and Intelligence

• Transparency is the watchword this month, with the Biden administration:

   

  • On June 3, issuing a counter-corruption executive order emphasizing clarity on ultimate beneficial ownership and the reduction in offshore financial secrecy; and
  • Increasing its focus on cryptocurrency regulation, particularly in the context of taxation and reducing the use of crypto to facilitate malware payments.
• On all fronts, from the Justice Department and the Treasury Department to the White House and National Security Council, the winds are blowing in the direction of more transparency and disclosure, and we expect more emphasis on this in the months to come—particularly in the context of discussions on tax evasion, tax structuring and tax reduction programs, and also in the rising risk of attacks on American infrastructure.
• The new approach to ransomware—treating it like a terrorist threat—will have implications for organizations that are in the business of moving money, and will ultimately mean tighter regulation (and likely, enforcement) of know your customer (KYC) and suspicious activity reporting (SAR) requirements.

Highlights from Kroll’s 2021 Anti-Bribery and Corruption Benchmarking Report

John Arvanitis, Contributor, Managing Director, Compliance Risk and Diligence

• Kroll’s Anti-Bribery and Corruption Benchmarking Report highlights results of a survey of 200 senior compliance and risk professionals from around the world to gain their unique perspective on the global anti-bribery and corruption (ABC) landscape in 2021.
• Key findings include:

   

  • Despite the majority of survey respondents agreeing that ESG should be part of compliance programs and that ABC programs create opportunities for good governance, 54% of global respondents also indicated that ESG creates more challenges than benefits for the compliance function.
  • Compliance officers are evaluating their compliance programs as generally effective (51%), but 71% of respondents feel that the compliance role will take on increased responsibilities in 2021.
  • Almost half (46%) of survey respondents believe that cyber security and data breaches are the top reason for increased risk, stressing the importance of cyber hygiene and secure technology platforms.

The Latest on Biden’s Infrastructure Plans

Chris Campbell, Chief Strategist

• Most observers in Washington continue to monitor the bipartisan negotiations over President Biden’s infrastructure proposal. There have been several developments over the past few weeks. The most recent was the announcement from a group of ten moderate Senators—five from each party—that they had an agreed on an outline for a proposal to spend $1.2 trillion on infrastructure over the next five years. However, the despite the stop-and-go nature of the public statements on the infrastructure negotiations, the underlying dynamics really have not changed. The two parties are still at odds on some fundamental issues—including what types of projects will be considered “infrastructure” and how to pay for the package. With most observers remaining skeptical at the prospects of a bipartisan deal, the biggest lingering questions are still focused on a handful of moderate Democrats. How much longer will they insist on pursuing a bipartisan agreement? And, if they eventually agree to move forward without any Republican support, what will it take to get their votes?