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Diplomacy in Action

Combating Corruption and Illicit Trade: Strengthening Market Integrity

David M. Luna
Director for Anticrime Programs, Bureau of International Narcotics and Law Enforcement Affairs
Statement at the APEC ACT-ABAC Roundtable Workshop: Concluding Session
Sendai, Japan
September 17, 2010


Good afternoon.

Prior to making some brief remarks, I would like to take this opportunity to thank Japan, the APEC Anticorruption and Transparency (ACT) Task Force, and the APEC Advisory Business Council (ABAC), for co-hosting with the United States this very successful APEC Roundtable. The United States also applauds all APEC economies for actively participating in today’s event as well as the leadership by the private sector and those international organizations present. A true public-private partnership requires action and commitment on the part of both public and private sectors to create a community of vigilance against corruption and to ensure criminal networks do not export neither violence nor harmful illicit goods across our borders.

Ambassador Masafumi Ishii, Gempachiro Aihara, ABAC 2010 Chair, distinguished colleagues, like others present, I too have been impressed with the breadth of our discussion today on ways that we can work across various APEC subfora to strengthen international cooperation across the Asia-Pacific region on combating corruption and illicit trade and ways to strengthen market integrity.

Combating Corruption and Illicit Trade: A Shared Responsibility

APEC Leaders and Ministers have commended the efforts of a wide-range of APEC subfora to address various aspects of illicit trade including, for example, corruption, money laundering, and terrorist financing. On anti-corruption, since the ACT Task Force came into existence, APEC Leaders and Ministers have also continually applauded our efforts over the years to combat corruption, including encouraging all economies to implement the UN Convention against Corruption (UNCAC), deny safe haven to corrupt individuals, and strengthen cooperation on a number of important anticorruption areas such as asset recovery, mutual legal assistance, and extradition. From preventing, investigating, and prosecuting corruption, APEC is a global leader in developing innovative approaches to fighting corruption.

For example, in 2006, under Vietnam’s leadership, the ACT Task Force expanded its work to more fully integrate public-private partnerships into our strategies to combat corruption and promote good governance. In 2007, Australia promoted Codes of Conduct and complementary Anti-Corruption Principles for business and government officials. In 2008, at the APEC Summit in Lima, Peru, APEC Ministers agreed to “dismantle transnational illicit networks and protect our economies against abuse of our financial system by corrupt individuals and organized criminal groups through financial intelligence and law enforcement cooperation related to corrupt payments and illicit financial flows.”

Last year in Singapore, APEC Leaders at the Summit in Singapore, November 14-15, 2009, noted “the importance of international cooperation in combating and dismantling the threat of cross-border criminal networks and its linkages with corruption nodes. We encourage member economies, where applicable, to ratify the UN Convention against Corruption and UN Convention against Transnational Organized Crime and take measures to implement their provisions, in accordance with economies' legal frameworks.” In 2009, ABAC also recommended to APEC Leaders to take action against illicit trade, by developing an effective mechanism to operate at the regional level, modeled on the 2007 APEC Code on Anti-Corruption, as a first step in coordinating an APEC-wide approach to address illicit trade.

As we have underscored in our important work in the ACT Task Force over the years, international legal cooperation is essential in the prevention, investigation, prosecution and punishment of serious corruption and financial crimes as well as combating illicit trade and dismantling criminal networks. In addition to those APEC economies that have chaired the ACT Task Force, economies such as Brunei, China, Indonesia, Korea, Malaysia, Mexico, Russia, and others, continue to make anticorruption a top priority. We hope to build on Japan’s contributions in chairing the ACT Task Force in 2010 and carry our collective action forward during the US APEC year in 2011.

As outlined in the final 2009 Independent Assessment of the Anti-Corruption and Transparency Task Force (Report to the APEC SOM Steering Committee on Economic and Technical Cooperation), and consistent with the ACT Course of Action (Santiago Commitment) and other high-level statements and commitments, we must work to develop a long-term strategy for cooperation on anti-corruption. One potential area is to leverage ACT’s expertise in the field anti-corruption and transparency to support other APEC subfora in efforts to address various challenges related to illicit economic activities such as money laundering and terrorist finance, counterfeiting, and other related criminal acts.

Strengthening Partnerships and Collaborative Networks Across the Pacific

This week we take a step forward in advancing this important agenda in APEC and working together across APEC subfora to help shape the call of our Leaders to strengthen cooperation to combat these important illicit areas that sap away at our energies to promote development, prosperity and security.

Particularly during the current global economic downturn, efforts to ensure the stability of the world’s financial systems and guard against the threat convergence of corruption, money laundering, organized crime and terrorist financing is vitally important. We hope that we can continue to stand together and strengthen our work in APEC to dismantle transnational illicit networks in the region, address the growing illicit trade and governance challenges, and combat corruption and those who corrupt our institutions.

As President Barack Obama and Secretary of State Hillary Clinton have noted on numerous occasions: no economy alone can solve today’s complex challenges. It requires creative partnerships and joint responsibility based on common interests, shared values, and mutual respect. The fight against transnational crime and corruption is one of these challenges.

And we can understand why as underscored in our earlier session this morning:

Kleptocratic networks, transnational criminal organizations and third generation gangs, for example, threaten our joint interests by forging alliances with corrupt government officials to exploit our openness, undermining competition in key global markets, diversifying their illicit enterprises into legitimate commerce, and unraveling the social fabric of all economies.

Criminal entrepreneurs who smuggle billions of dollars of illegal goods across borders – drugs, arms, humans, natural resources and endangered wildlife parts, counterfeit medicines and pirated software, as well as embezzled public funds – create insecurity, cost our economies jobs and tax revenue, endanger the welfare and safety of our families and communities, and overwhelm law enforcement counter-measures.

So one of the ways to get ahead of these determined and well-resourced adversaries is for us to coordinate and cooperate better and build our own cooperative network in partnership with a coalition of committed private sector leaders.

Stemming Counterfeits By Plugging Kleptocratic Pathways and Tracking Illicit Financial Flows

Corruption must be tackled head on if our governance and economic strategies are to succeed to promote prosperity across the Asia Pacific region. Criminal entrepreneurs use corruption to launder embezzled public funds, smuggle billions of dollars of illegal goods, and obtain safe haven and protection for themselves and their enterprises. This overwhelms and corrupts law enforcement institutions and fuels insecurity throughout our communities.

Following the money must be an integral part of our strategies in dealing with illicit networks to deny criminals and their networks access to entities and mechanisms used to launder their illicit criminal proceeds and hide the instrumentalities. Depriving the networks of their profit and funding is one of the most effective ways to deter them. This requires a holistic, comprehensive anti-money laundering regime including the ability to trace, freeze, and seize assets related to illicit financial flows, while addressing both formal and informal financial networks.

Another growing threat is the rise of harmful counterfeits throughout Asia Pacific. Transnational criminal groups are flooding the world market with counterfeit (and sometimes deadly) goods. We need to synchronize our efforts to more effectively stem the illicit trade and crackdown on supporting illicit facilitators related to counterfeits, fake medicines and pharmaceuticals that endanger the health of our citizens.

We also now detect the common links between wildlife trade, drug trafficking and human trafficking, which reveals a nexus of crime. Environmental crimes such as, for example, illegal dumping of hazardous waste and materials, illegal fishing, illegal trade in wildlife, and illegal logging are also among the fastest illicit areas of international criminal activity and rank among the most lucrative types of black market commerce. While many of these issues are not appropriate to take up within the APEC context, various APEC subfora have been making efforts to tackle particular aspects of the illicit trade problem. Building on this foundation, APEC expert groups have the opportunity to identify areas for further cooperation that contribute to more general efforts at the global level to tackle illicit trade.

Collective Action: International Cooperation and Collaborative Platforms

We must be clear-eyed to confront our common challenges that we will continue to discuss at our ACT Task Force meetings over the next two days. Not only should we remain vigilant to our cause, but we must also think creatively in examining in greater details corruption and illicit trade. As our capability to disrupt the illicit networks strengthens, we undoubtedly see the criminals adapting their practices to avoid detection and victimizing our communities.

The problem is too large for any one of our governments and we can not continue to live in a state of perpetual illicitness. We will continue to confront some setbacks no doubt but we must enhance our cooperation and strengthen our capacities. It too will require that we work together closely at the bilateral, sub-regional, regional and global level.

So one of the ways to get ahead of these determined and well-resourced adversaries is for us to coordinate and cooperate better and build our own law enforcement networks.

At the U.S. Department of State, we are working across the U.S. law enforcement and interagency community to develop more vibrant partnerships and collaborative platforms to combat today’s transnational threat networks. My colleague from the U.S. Department of Justice – Philip Guentert, Office of International Affairs, Criminal Division – has further elaborated this afternoon on some of these cooperative efforts.

We are also developing more dynamic inter-regional partnerships that strengthen cross-border cooperation. For example, in November 2009 in Honolulu, we sponsored, with the U.S. Department of Homeland Security’s Immigration and Customs Enforcement (ICE), Australia and New Zealand, the Trans-Pacific Symposium on Dismantling Transnational Illicit Networks. The event brought together participants from approximately 25 economies from Asia, Latin America, and the Pacific Islands, as well as senior representatives from international organizations such as APEC. I would also like to thank, William Wallrapp, DHS Homeland Security Investigations (HSI), for joining us in today’s roundtable.

Among the recommendations that emanated from the trans-Pacific symposium included many ideas on ways to better equip ourselves against illicit threats across the region. These include devising more strategic frameworks and information-sharing arrangements, leveraging international cooperation across regional and global law enforcement networks, strengthening capacity building in law enforcement, coordinating joint investigations to target “money conduits” and corruption nodes, and securing borders by optimizing border controls.

We applaud the Government of New Zealand for partnering with the United States on the follow-up to the trans-Pacific symposium and hosting the workshop on “Interagency Cooperation on Combating Transnational Illicit Networks” in Christchurch, New Zealand, on November 17-18, 2010.

I hope that the ACT Task Force continues to partner with ABAC, CTI, CTTF, LSIF, and other subfora, on ways that can truly leverage the wealth of expertise across APEC to develop better results for our ministers and leaders and to demonstrate to our communities that working together we are committed to better governance and combating networks that profit from their illicit enterprises and criminal behavior.

Corruption and illicit trade is one of these cross-cutting and important issues that impact our joint agenda towards greater economic growth, prosperity and development. In 2010-2011, the United States looks forward to building with other economies and partners an ACT Task Force program on UNCAC implementation, the prevention of corruption, and developing capacities to investigate and prosecution transnational corruption and bribery.

We also hope to bridge effective partnerships and synergies with other APEC subfora, and across the region, to build further attention to, and capacities on, corruption and the illicit trade and its costs to our communities including, for example, the impact of counterfeits to the health and safety of our people.

In closing, the United States applauds our APEC partners for collaborating and participating in today’s roundtable, and on the discussion on possible ideas, capacities, and pragmatic approaches to help shape our work program to combat corruption and illicit trade and strengthen market integrity across our respective economies.

Thank you.

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