Kleptocracy and Money Laundering: A Conversation with Kendall Day

On July 18th, Partnership for Transparency’s Anti-Corruption Forum and Hudson Institute’s Kleptocracy Initiative hosted a discussion on the U.S. Government’s response to kleptocracy and money laundering around the globe, featuring Deputy Assistant Attorney General, Kendall Day. Kleptocracy Initiative’s Executive Director Charles Davison, introduced and moderated the event and PTF’s Director of the Barry Metzger Rule of Law Initiative, Bill Corcoran introduced Kendall Day. The discussion served to foster common understanding of critical issues involved in fighting corruption. The 130+ participants included representatives from nonprofit organizations, law firms, universities, government agencies, and the media.

Kendall Day’s presentation discussed the cases and challenges of the Department of Justice’s Kleptocracy Asset Recovery Initiative and emphasized the importance of robust anti-money laundering programs. Day began by informing attendees of the high cost of corruption, equaling  2% of U.S. GDP, calling the country’s financial system a “playground” for criminals. Less quantifiable impacts of kleptocracy are being felt today, including threats to national security, decreasing trust in government, and contempt for the rule of law. In order to combat this, Day argued that international cooperation is paramount and must continue to improve in order to send a message that criminals cannot get away with money laundering. The cases Day highlighted involved the seizure of billions of dollars of corruption proceeds in Malaysia, Nigeria, and other places around the world. A legacy of corruption in many of these countries prevents law enforcement officials from developing skills to cooperate across districts. An additional challenge involves the handling of client money by law firms and how this interacts with financial institutions, and the loopholes of shell and front companies in the U.S. anti-money laundering legal system. The U.S. must take steps to protect its financial system and to respond to foreign governments who request help.

Gary Kalman, the Executive Director of the Financial Accountability and Corporate Transparency Coalition, spoke in the panel about the ease of setting up a company in the United States and how no state collects true ownership information when businesses are opened and accounts set up. However, he pointed out the increasing bi-partisan support for bills in Congress combatting beneficial ownership. Karen Greenaway, a supervisory special agent under the Federal Bureau of Investigation’s International Corruption Unit, discussed the congruence of tactics used by kleptocrats, terrorists, and transnational organized crime. Despite the oftentimes abstract and distant consequences of kleptocracy and money laundering, it is important to explain to people how and why they are victims and that investing in anti-corruption measures is relevant to them, since it is the U.S. financial system that is being exploited. Finally, the co-founder of PTF and Transparency International, Frank Vogl, discussed the more broad humanitarian impacts of corruption, pointing towards the mass starvation in four African countries where corrupt officials diverted funds intended for humanitarian and development goals. With such high consequences, government leaders need to place more attention on kleptocracy and corruption and better fund agencies like the FBI to tackle the problem.

The event concluded with questions from the attendees and an agreement that there must be sustained outrage over kleptocracy and money laundering schemes in order to prompt response by the U.S. Government, international actors, and citizens. 

Speakers

Kendall Day Keynote Speaker
Deputy Assistant Attorney General, Kleptocracy Asset Recovery Initiative, U.S. Department of Justice

Bill Corcoran Speaker
Director, Barry Metzger Rule of Law Initiative, Partnership for Transparency 

Charles Davidson Moderator
Executive Director, Kleptocracy Initiative, Hudson Institute

Karen Greenaway Panelist
Supervisory Special Agent, International Corruption Unit, Federal Bureau of Investigation

Gary Kalman Panelist
Executive Director, Financial Accountability and Corporate Transparency Coalition

Frank Vogl Panelist
Co-founder, Transparency International and Co-founder, Pa

Event Sponsors

       

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