This article first appeared on La Tercera on December 22, 2021.

The cost of corruption is so high that we cannot ignore it. Its scope is so broad and deep that if we do not put a stop to it, 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 numbers, it translates into a cost to the world economy of about 5% of global GDP, or about $2.6 trillion annually, according to UN data. What more do we need to do to address it strategically?

Last June, U.S. President Joe Biden established the fight against corruption as a matter of national security concern, giving a 200-day deadline to the country’s departments and agencies to make recommendations to strengthen the fight against this problem. And that deadline was met a few days ago, resulting in a new strategy to fight corruption at a global level, emphasizing international cooperation. To this end, it proposes to modernize, coordinate and allocate more resources to this fight; to demand accountability from the corrupt; among other actions.

This is in addition to other measures being applied by the United States in 2021, such as the Engel List, which includes corrupt citizens of Guatemala, Honduras, and El Salvador, who are prohibited from entering the country, including former presidents, ministers, prosecutors, and even their immediate family members. On the other hand, in January 2022, the Corporate Transparency Act (CTA), which creates a registry of final beneficiaries of companies, should enter into force, and seek greater financial and commercial transparency to avoid crimes such as money laundering. This is of particular interest in the United States, since, as explained by the Secretary of the Treasury, Janet Yellen, “there are too many dark financial areas in the United States that harbor corruption”, since “enormous amounts of illicit money” end up in its financial system. For this reason, the focus is on demanding more transparency in reporting real estate transactions in cash and thus curbing illicit financing.

In this regard, U.S. concern has a clear focus: to address corruption by addressing the reality of Latin America -especially Central America- where economies are weaker, corruption is increasingly powerful, and where the proliferation of drug trafficking is undermining their systems.

This is a warning for Latin American or transnational companies with operations in the region since the new strategy will strengthen the Foreign Corrupt Practices Act (FCPA), a regulation that is already quite demanding, and that will pay greater attention and sanction with greater rigor any company involved -voluntarily or involuntarily- in acts of corruption. In this way, it is expected that the number of cases of application of this law will increase in an area where there has been no major progress in combating this problem.

This warning should be taken seriously because the chances of falling into the clutches of corruption can be fortuitous, particularly if there is no proper risk assessment or due diligence when doing business or hiring employees since the chances of a legal entity being used for fraudulent purposes is very high.

In this regard, prevention and the generation of evidence in companies regarding their good practices can be decisive in the face of any conflict, but above all, companies must be involved with a probative, ethical, and transparent behavior, where compliance is the heart of their business and not just the literal translation of “compliance”.

It is worth asking, then, whether U.S. anti-corruption efforts can help reduce corruption rates in Latin America, especially considering the effects that the pandemic has had on the region. It is to be hoped that this will be 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 jeopardizes something as vital as democracy.