New OSCE Recommendations to Combat Corruption, Money Laundering, and the Financing of Terrorism

Abstract

A model Anticorruption Protocol to the United Nations Convention against Corruption (APUNCAC) would implement international requirements to report the beneficial ownership of funds involved in certain financial transactions. The purpose is to discourage the laundering of illicit funds by attaching legal consequences to each failure to obtain and submit a required report of beneficial ownership, and each failure by a front man who poses as a beneficial owner to supply true information regarding the identity of the actual beneficial owner. This article is the fifth in a series of articles describing APUNCAC’s anti-money-laundering (AML) provisions and focus on beneficial owner transparency. The companion articles focus on issues regarding international jurisdiction and enforcement of APUNCAC regarding distant offshore personnel, illustrate the application of APUNCAC to specific money laundering channels, answer frequently asked questions (FAQ), and translate APUNCAC’s key provisions into proposed Financial Action Task Force (FATF) recommendations. This article explains how APUNCAC’s key provisions may be translated into Organization for Security and Co-operation in Europe (OSCE) recommendations, why the OSCE may be especially inclined to adopt the recommendations, and why support of this initiative might be the most promising path that could be adopted by the international community to combat corruption, money laundering, and the violations of human rights that are associated with these crimes.

1. Introduction

According to documents obtained by the International Consortium of Investigative Journalists (ICIJ), trillions in tainted dollars flow freely through major banks, swamping a broken enforcement system (ICIJ 2020). Criminals who engage in human trafficking, sex trafficking, drug trafficking, transnational organized crime, and terrorism use loopholes in the international financial system to hide the proceeds of their crimes. Criminal investigators are stymied by the difficulty of tracing illicit funds to their source. The enforcement system is overwhelmed, suggesting a need for aggressive changes.

A model Anticorruption Protocol to the United Nations Convention against Corruption (APUNCAC) would implement international requirements to report the beneficial ownership of funds involved in certain financial transactions.1 The purpose is to discourage the laundering of illicit funds by attaching legal consequences to each failure to obtain and submit a required report of beneficial ownership, and to each failure by a front man who poses as a beneficial owner to supply true information regarding the identity of the actual beneficial owner. This article explains how APUNCAC’s key provisions may be translated into 19 Organization for Security and Co-operation in Europe (OSCE) recommendations, why the OSCE may be especially inclined to adopt the recommendations, and why support of this initiative might be the most promising path that could be adopted by the international community to combat corruption, money laundering, and the violations of human rights that are associated with these crimes.

This article contributes a detailed plan to fight corruption, money laundering, and all crimes that are facilitated by corruption and money laundering. This plan is different from other proposals in four ways. First, it focuses on trapping front men, arguably the weak link when money laundering occurs, into false statements that can then be used by prosecutors to elicit cooperation agreements. Cooperation can then be used to collect evidence and compile damning testimony against the criminals who orchestrate the criminal activity. This type of strategy, working from the bottom toward the top of a criminal organization, is the same type of strategy that was successfully employed by U.S. attorneys to fight the mafia and other powerful criminal organizations (Jacobs et al. 1994). Second, this plan involves the implementation of aggressive laws, including the Racketeer Influenced and Corrupt Organizations (RICO) Act (to fight organized crime), the False Claims Act (to fight corruption and procurement fraud), a model campaign finance law, and New York’s conflict of interest rules and regulations. Third, this plan would implement UN-supported anticorruption inspectors and dedicated domestic anticorruption courts staffed by judges and prosecutors vetted by the UN Commission on Crime Prevention and Criminal Justice. Fourth, this plan has been distilled into 19 succinct recommendations to implement laws and regulations whose language has already been spelled out in 200 pages of detailed text. This facilitates an examination of the proposed language, understanding of its implementation, and resolution of any issues.

This article follows a companion article that explained how APUNCAC’s key provisions may be translated into 19 proposed FATF recommendations (Yeh 2022a). The recommendations, and the rationale for the recommendations, remain the same.2 However, although the FATF’s mission, history, orientation, and structure are well aligned with APUNCAC’s AML provisions, they are not strongly aligned with provisions that seek to implement RICO, the False Claims Act, a model campaign finance law, New York’s conflict of interest rules and regulations, anticorruption inspectors, and dedicated anticorruption courts. This suggests a need to pursue an alternative path, perhaps in parallel with efforts to persuade the FATF to adopt the 19 recommendations.

At the heart of this analysis is the premise that revisions to existing AML regulations would be inadequate to combat the type of systemic failures identified by the ICIJ. There is a need for far-reaching structural reforms that address the ways that powerful criminal organizations have co-opted government institutions, offices, and the international financial system. The FATF is not well-suited to the adoption of recommendations involving this type of structural reform.

This article focuses on the potential role of the OSCE because the organization’s 57 participating states include many of the world’s most influential countries that are united in their resolve to fight corruption, promote good governance and the rule of law, and address violations of human rights. The OSCE seeks to implement the types of good governance reforms that are proposed via this article. Within the set of established intergovernmental organizations, the OSCE is perhaps the most likely intergovernmental organization to adopt the 19 proposed recommendations to fight corruption and promote good governance. For this reason, it may offer the best hope for pursuing the adoption of the 19 recommendations and achieving the progress that would result.

Section 2 of this article situates the article in terms of prior literature and articulates the rationale for translating APUNCAC into a set of proposed OSCE recommendations. Section 3 describes the OSCE, with a focus on explaining why OSCE-participating states may be especially interested in adopting recommendations designed to fight corruption, promote good governance and the rule of law, and address violations of human rights. Section 4 reviews 19 recommendations that could be adopted by the OSCE, focusing on the alignment of these recommendations with the OSCE’s stated mission, the 2012 Dublin “Declaration on Strengthening Good Governance and Combating Corruption, Money-Laundering and the Financing of Terrorism”, the 2014 Basel Decision regarding “Prevention of Corruption”, and the 2016 Hamburg Decision regarding good governance. Section 5 compares and contrasts the potential of the OSCE with the potential of the FATF in adopting and implementing the 19 recommendations. Section 6 discusses the OSCE’s unique role and mandate, potential barriers, and potential solutions to key issues. Section 7 concludes.

2. APUNCAC

APUNCAC has been the focus of a decade of studies (Christensen 2021; dela Rama et al. 2022; Michel 2021; Singh 2021; Yeh 2011a, 2011b, 2012a, 2012b, 2013, 2014a, 2014b, 2015, 2020a, 2020b, 2020c, 2021a, 2021b, 2022a, 2022b). Previous articles have described APUNCAC’s anti-money-laundering (AML) provisions and focus on beneficial owner transparency, addressed issues regarding international jurisdiction and the enforcement of APUNCAC regarding distant offshore personnel, and illustrated the application of APUNCAC to specific money laundering channels (Yeh 2020a, 2020b, 2020c, 2021b). A companion article answered frequently asked questions (FAQ) and translated APUNCAC’s key provisions into proposed Financial Action Task Force (FATF) recommendations (Yeh 2022a).

The provisions incorporating RICO, the False Claims Act, a model campaign finance law, and New York’s conflict of interest rules and regulations have been described (Yeh 2021b, 2022b). Barriers to the implementation of international inspections have been analyzed, addressing questions about why United Nations member states might elect to become States Parties to APUNCAC, why leaders who themselves may be corrupt might experience pressure to sign APUNCAC, and why domestic law enforcement personnel might feel obligated to comply with UN inspectors (Yeh 2015, 2021a, 2022b). Significantly, 123 UN member states elected to become States Parties to the Rome Statute. The Rome Statute permits investigations led by international criminal investigators, setting a powerful precedent for international investigations.

These analyses drew upon the experiences of America, Georgia, Guatemala, Honduras, Hong Kong, Nigeria, Romania, Singapore, Ukraine, and the UK, and the experience of the 123 UN member states that are parties to the Rome Statute (Michel 2021; Singh 2021; Yeh 2015, 2021a, 2022b). Specific issues regarding jurisdiction, cooperation, enforcement, complementarity, data privacy, the paperwork burden, and transaction friction have been addressed. The analyses suggest that the APUNCAC strategy is feasible, practical, and sensible.

Drafting and implementing an international convention is, however, a lengthy, arduous process. It may be difficult to obtain the level of consensus that would be required of United Nations member states to draft, sign, and ratify an international treaty such as APUNCAC. Instead of presenting APUNCAC as a single 200-page international treaty, this article breaks APUNCAC into a series of 19 proposed OSCE recommendations. This approach seeks to bypass the complications and delays that are involved in drafting and pursuing an international convention.

3. OSCE

The OSCE comprises 57 participating states, 6 Mediterranean partners, and 5 Asian partners for cooperation. The 57 OSCE participating states include Albania, Andorra, Armenia, Austria, Azerbaijan, Belarus, Belgium, Bosnia and Herzegovina, Bulgaria, Canada, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Georgia, Germany, Greece, Holy See, Hungary, Iceland, Ireland, Italy, Kazakhstan, Kyrgyzstan, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Moldova, Monaco, Mongolia, Montenegro, Netherlands, North Macedonia, Norway, Poland, Portugal, Romania, Russian Federation, San Marino, Serbia, Slovakia, Slovenia, Spain, Sweden, Switzerland, Tajikistan, Turkey, Turkmenistan, Ukraine, United Kingdom, United States, and Uzbekistan.

The OSCE Parliamentary Assembly involves over 300 parliamentarians, representing the OSCE’s 57 participating states. The Parliamentary Assembly offers parliamentary input and acts on OSCE decisions and recommendations. The Ministerial Council is composed of foreign ministers of OSCE-participating states and is the central OSCE decision-making and governing body. The OSCE convenes summit meetings of the heads of state of OSCE-participating states to set priorities and formulate decisions. The Permanent Council, involving representatives of all participating states, meets weekly in Vienna. The OSCE Secretariat provides operational support and is led by a Secretary General who is elected to a 3-year term by the Ministerial Council. The OSCE executive structure includes an Office for Democratic Institutions and Human Rights, based in Warsaw; the Representative on Freedom of the Media, based in Vienna; and the High Commissioner on Minorities, based in the Hague.

The OSCE traces its origins to the establishment of the Conference on Security and Co-operation in Europe (CSCE) in the early 1970s. Meeting over two years in Helsinki and Geneva, the CSCE reached an agreement on the Helsinki Final Act, signed on 1 August 1975 (CSCE 1975). The Helsinki Accords involved a politically binding agreement regarding politico-military, economic, environmental, and human rights issues and established ten fundamental principles governing the behavior of states towards their citizens, as well as towards each other.

Until 1990, the CSCE functioned as a series of meetings and conferences that built on and extended the participating states’ commitments, while periodically reviewing their implementation. However, with the end of the Cold War, the CSCE established a new course at the Paris Summit in November 1990. The CSCE adopted the Charter of Paris for a New Europe, which challenged the organization to adopt a proactive role in managing the historic changes taking place in Europe and responding to the new challenges of the post-Cold War period (CSCE 1990). This led to the establishment of permanent OSCE institutions and operational capabilities. As part of this institutionalization process, the name was changed from the CSCE to the OSCE by a decision of the Budapest Summit of Heads of State or Government in December 1994.

3.1. Mission

The OSCE’s mission, orientation, and structure build on CSCE’s historic role in establishing the Helsinki Accords. By tradition, the OSCE seeks to build agreements among participating states spanning politico-military, economic, environmental, human rights, and humanitarian concerns. The OSCE seeks to coordinate international action to promote stability, peace, and democracy. A prime focus is good governance:

Good governance at all levels is fundamental to economic growth, political stability, and security. The OSCE works to tackle many aspects of weak governance, including corruption and money-laundering, and to promote full respect of the rule of law, increase transparency, and develop effective legislation as the foundation of a functioning State.

(OSCE 2022b)

This priority is managed by the Office of the Co-ordinator of OSCE Economic and Environmental Activities (OCEEA), consistent with prior OSCE decisions:

Promoting good governance and combating corruption, money laundering, and the financing of terrorism are among the key activities of the Office of the Co-ordinator of OSCE Economic and Environmental Activities (OCEEA). These activities are based on a number of OSCE Ministerial and Permanent Council Decisions, including the 2014 Basel Ministerial Council Decision on the Prevention of Corruption and the 2012 Dublin Ministerial Council Declaration on Strengthening Good Governance and Combating Corruption, Money-Laundering and the Financing of Terrorism. The OCEEA actively supports national reforms and transparency initiatives, as well the development and implementation of more effective anti-corruption policies and mechanisms to help participating States in achieving good economic governance, creating robust anti-money laundering regimes, a solid ethics infrastructure, and sound financial and resource management.

(OSCE 2022b)

The OSCE seeks to promote legislative changes to align state legal systems with these priorities:

To ensure the quality and effectiveness of laws related to the human dimension, the OSCE Office for Democratic Institutions and Human Rights (ODIHR) supports participating States by reviewing their law-making systems and relevant draft and existing legislation. In providing such support, the Office draws on legislative guidelines in specific areas, such as elections, freedom of assembly and political party legislation, as well as the resources of Legislationline.org, ODIHR’s online legislative database.

(OSCE 2022b)

The OSCE promotes good governance by:

• Strengthening multi-stakeholder co-operation among governments, the private sector, and civil society.
• Providing targeted technical and capacity building support, including through training and awareness-raising campaigns.
• Promoting inter-agency co-operation and coordination.
• Supporting authorities’ efforts against corruption, money-laundering, and terrorism financing.
• Conducting targeted trainings on conflicts of interest prevention.
• Supporting the creation of anti-corruption strategies, action plans, and bodies.
• Promoting integrity in public service through the development and implementation of codes of ethics and asset declaration mechanisms.
• Regulations on whistle-blower protection.
• Sound and transparent public procurement processes.
• Improving relevant legislative frameworks.
• Advising to improve transparency and civic participation.
• Strengthening the management of public funds.
• Supporting regulatory reform and simplification.

In sum, the OSCE’s mission, orientation, structure, and activities are closely aligned with the task of promulgating new recommendations to combat corruption, money laundering, and the financing of terrorism, and to accomplish these objectives by promoting legislative changes that promote good governance and initiatives that strengthen multi-lateral cooperation among governments, the private sector, and civil society; providing technical support and training; promoting inter-agency coordination; supporting anticorruption, anti-money laundering (AML), and countering the financing of terrorism (CFT) initiatives; supporting training to prevent conflicts of interest; supporting the creation of anti-corruption strategies, action plans, and bodies; promoting integrity in public service through the development and implementation of codes of ethics and asset declaration mechanisms; promoting whistleblower protections and transparent public procurement processes; improving legal frameworks; improving transparency; strengthening the management of public assets; and promoting regulatory reform. This mission, orientation, and structure are well aligned with the 19 recommendations presented in Section 4, below.

3.2. The 2012 Dublin Decision

In December 2012, OSCE-participating states agreed upon the “Declaration on Strengthening Good Governance and Combating Corruption, Money-Laundering and the Financing of Terrorism” (OSCE 2012). The 2012 Dublin Decision declared the OSCE’s “strong support for promoting good governance and transparency in the OSCE area”, recognized “shared commitments, principles and instruments that the participating States should implement in their efforts to promote good governance and transparency”, reaffirmed the OSCE’s “full commitment to tackling corruption and countering money-laundering, the financing of terrorism and related offences by making them policy priorities backed up by appropriate legal instruments, adequate financial, human and institutional resources and, where necessary, appropriate tools for their practical and effective implementation”, and reaffirmed the OSCE’s “agreement to work on a national basis, with the support of relevant international institutions, to strengthen good governance in all its aspects” (OSCE 2012, pp. 1–2). OSCE-participating states acknowledged “the fundamental importance of effectively preventing … [the] diversion of public assets”, underlined “the urgent need to enhance international co-operation among States in devising and adopting effective measures for the prevention of the financing of terrorism, as well as for its suppression through the prosecution and punishment of its perpetrators”, and recognized “that financial investigations are a crucial tool in tackling not only money-laundering and the financing of terrorism, but also related and predicate offences” (OSCE 2012, pp. 4–5).

3.3. The 2014 Basel Decision

In December 2014, OSCE-participating states agreed upon Decision No. 5/14, titled, “Prevention of Corruption” (OSCE 2014). The 2014 Basel Decision reaffirmed the OSCE commitment to combat corruption, money laundering, and the financing of terrorism and to strengthen good governance. The Decision underlined “the central role played by law enforcement bodies and judicial institutions in preventing and combating corruption”, recognized “the importance of international co-operation between national anti-corruption bodies for the exchange of best practices, further development of anti-corruption measures and exchange of knowledge”, highlighted “the importance of co-operation with other relevant international organizations in preventing and combating corruption”, and encouraged participating states to “develop and implement preventive anti-corruption legislation and policies, and establish and promote practical measures and tools to address all forms and levels of corruption for both the private and the public sectors”; “take measures to enhance transparency, accountability and the rule of law in public administration”; and “adopt, maintain and strengthen systems that prevent conflicts of interest in the public sector, including, for example, by addressing conflicts of interest through enforceable codes of conduct and by establishing and strengthening asset declaration systems applicable to public officials” (OSCE 2014, pp. 1–2).

The Decision encouraged participating states to

foster the involvement of the private sector, civil society organizations, the media and academia, including through the support of the OSCE executive structures, in accordance with their mandates, in developing national anti-corruption strategies and policies and to support their subsequent implementation; promote a culture of integrity, transparency and accountability, across all sectors of society in order to contribute to the prevention of corruption; recognize the important role whistle-blowers play in identifying and preventing corruption and defending public interest, and intensify individual national efforts to provide sufficient protection for whistle-blowers; [and] take the necessary steps, in accordance with the fundamental principles of their legal systems, to establish or enhance appropriate systems of public procurement that are based on transparency, competition and objective criteria in decision-making, that are effective in preventing corruption.

(OSCE 2014, pp. 2–3)

Significantly, the Decision encouraged participating states to

support measures to strengthen the integrity of the judiciary and to prevent opportunities for corruption among members of the judiciary and prosecution services; implement and adhere to the relevant international standards to fight corruption, such as those prescribed by the United Nations Convention against Corruption and, where appropriate, by the OECD and the Council of Europe conventions on corruption and contribute to intensifying the involvement of civil society in their implementation as laid out in these conventions; establish and implement effective, proportionate, and dissuasive sanctions and administrative penalties to penalize corruption for natural as well as, where appropriate, legal persons, with a view to discouraging and stemming corruption; [and] facilitate the recovery of stolen assets as part of national measures as well as in the framework of international and, where appropriate, regional co-operation and ensure beneficial ownership transparency.

(OSCE 2014, p. 3)

Perhaps most significantly, the Decision tasked

the OSCE executive structures, in particular the Office of the Co-ordinator for OSCE Economic and Environmental Activities (OCEEA) and, where appropriate, field operations, in co-operation with relevant international partners, inter alia, the United Nations Office on Drugs and Crime (UNODC), the Organisation for Economic Co-operation and Development (OECD), the World Bank (WB), the United Nations Development Programme (UNDP), the Council of Europe (CoE), and the International Anti-Corruption Academy (IACA), to assist participating States, within existing resources and upon their request, in the implementation of their commitments within the UNCAC and in the formulation of national policies, in the exchange of best practices and in the delivery of capacity-building activities and projects in the area of preventing and combating corruption;

(OSCE 2014, p. 3)

and, furthermore, tasked

the Economic and Environmental Committee, with input and contributions from the OSCE Secretary General and the OSCE field operations, to present a report to the Permanent Council no later than 1 June 2015 providing options for strengthening the current OSCE capacity on combating and preventing corruption and for enhancing co-ordination among the OSCE executive structures in that field, taking available resources into consideration.

(OSCE 2014, p. 4)

In sum, the 2014 Basel Decision formalized a commitment by participating states to combat corruption, money laundering, and the financing of terrorism, to strengthen good governance, and to utilize the OSCE institutional structure to implement these commitments, formulate national policies, exchange best practices, and build capacity in the area of preventing and combatting corruption. The Decision envisions that OSCE-participating states would, with the assistance of the OSCE, implement broad reforms, involving domestic law enforcement bodies, judicial institutions, international co-operation between national anti-corruption bodies, and co-operation with other relevant international organizations in preventing and combating corruption; develop and implement preventive anti-corruption legislation and policies; establish practical measures to address all forms and levels of corruption for both the private and the public sectors; develop measures to enhance transparency, accountability, and the rule of law in public administration; and adopt, maintain, and strengthen systems that prevent conflicts of interest in the public sector, including regulations to deter conflicts of interest through enforceable codes of conduct and by establishing and strengthening asset declaration systems applicable to public officials. These commitments align with the proposal that the OSCE adopt 19 new recommendations intended to combat corruption and promote good governance.

3.4. The 2016 Hamburg Decision

In December 2016, OSCE-participating states agreed upon Decision No. 4/16, titled “Strengthening Good Governance and Promoting Connectivity” (OSCE 2016). The 2016 Hamburg Decision reaffirmed the OSCE’s commitment to combat corruption; recognized that corruption and lack of good governance are potential sources of political tension that undermine the stability and security of participating states; acknowledged the importance of good governance, the rule of law, sound regulatory frameworks, transparency, accountability, and the prevention of corruption, money laundering, and the financing of terrorism; recognized the importance of the FATF standards to combat money laundering and terrorist financing; affirmed the importance of sound public procurement processes; and reaffirmed existing OSCE commitments to good governance (OSCE 2016, pp. 1–3). The Hamburg Decision encouraged participating states to facilitate cooperation among law enforcement, the judiciary and financial intelligence units and other relevant actors, including civil society, in combating corruption, money laundering, and other financial crime; and tasked OSCE executive structures, including field operations, to support good governance efforts, including combating corruption, money laundering, and the financing of terrorism (OSCE 2016, p. 5).

4. “19 OSCE Recommendations”

The rationale for translating APUNCAC’s key provisions into 19 proposed OSCE recommendations is that it may be difficult to obtain the level of consensus that would be required of United Nations member states to draft, sign, and ratify an international treaty such as APUNCAC. A significant barrier is that it may not be possible to obtain an agreement regarding APUNCAC’s detailed language.

Instead of presenting APUNCAC as a single 200-page international treaty, this article breaks APUNCAC into a series of 19 proposed OSCE recommendations. This approach serves to bypass the need to obtain agreement among contentious UN member states regarding a single consolidated text, bypasses the need to obtain ratification by those states, and bypasses the complications and delays that are involved in drafting and pursuing an international convention. In short, the alternative strategy would be more feasible than the strategy of implementing a single complex international convention.

Although OSCE recommendations are not legally binding in the way that an international convention is binding, and although the OSCE cannot enforce actions against the will of a participating state, the 57 participating states have committed to the implementation of OSCE decisions and recommendations. OSCE recommendations are influential in shaping domestic legal and regulatory regimes in 57 major nation states. If the 57 OSCE-participating states implement the proposed recommendations, the path towards an international convention, involving a single consolidated text, would be easier. In that case, the key provisions would already have been incorporated into the domestic laws and regulatory regimes of influential jurisdictions, paving the way for broad agreement that those provisions are indeed feasible, practical, and sensible. In short, the strategy of breaking APUNCAC into a series of OSCE recommendations may be the best approach for incorporating the APUNCAC language into law and regulation.

4.1. New OSCE Recommendation 1—Beneficial Owner Reporting Rule

Require the beneficial sender and the beneficial recipient to digitally certify ownership when funds are transferred in amounts exceeding USD 3000 and require individuals who assist with those transactions to submit those certifications to a centralized Financial Crimes Enforcement Network (FINCEN) database.

Model conforming language: APUNCAC Articles 21, 22, 30, 31, 32.

4.2. New OSCE Recommendation 2—FINCEN Database

Create a centralized database maintained by a Financial Crimes Enforcement Network (FINCEN) modeled on the U.S. Treasury Department’s FinCEN but operated by the United Nations. The database would serve as a central repository of beneficial owner information for each covered financial transaction and would facilitate the investigation and prosecution of financial crime and associated crime.

Model conforming language: APUNCAC Article 19.

Recommendations 1 and 2 align with the Basel Decision commitment to promote beneficial ownership transparency. If authorities obtain e-mail or text messages directing the “beneficial owner” to send/receive funds, that would be sufficient to prove that the named person is not, in fact, the true beneficial owner (because only the beneficial owner can issue instructions). In many cases, it may be easier for investigators to obtain e-mail and text messages (compared to the task of proving that funds are illicit).3 The APUNCAC rule requires the fake beneficial owner to certify information that is demonstrably false. In contrast, the existing AML regime does not require the fake beneficial owner to certify information that is demonstrably false.

If, as a consequence of Recommendation 1, front men think there is a credible probability of being caught, the volume of willing accomplices would shrink, perhaps dramatically. The starting point of every investigation would be to cross-check beneficial owner information against known information drawn from tax databases. This would quickly identify smurfs and other front men whose annual income is grossly inconsistent with the volume of their financial transactions. Recommendation 1 would permit investigators to pressure the front men into cooperation agreements, facilitating the collection of testimony and evidence against the criminals who orchestrate the activity. Investigations would be vastly more efficient than the current strategy of trawling through millions of suspicious activity reports. This could be expected to have a potent deterrent effect.

4.3. New OSCE Recommendation 3—AML Regulations

Implement APUNCAC AML provisions and the Model Guarantee.

Model conforming language: APUNCAC Articles 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, and the Model Guarantee.

4.4. New OSCE Recommendation 4—Penalties

Impose penalties including debarment, fines, and imprisonment for individuals who violate the APUNCAC AML rules, and individuals who do not cooperate in isolating debarred individuals.

Model conforming language: APUNCAC Articles 18, 19, 39, 40.

Recommendations 3 and 4 align with OSCE commitments to combat money laundering. They would implement regulations intended to isolate debarred individuals in the same way that recalcitrant individuals who continue to do business with individuals on the U.S. Treasury Department’s Specially Designated Nationals and Blocked Persons (SDN) List are subject to criminal penalties. Arrests could occur if suspects travel to the jurisdiction of any of the 189 nations that are parties to the United Nations Convention against Transnational Organized Crime (UNTOC), which are legally bound by the terms of UNTOC, including the terms whereby any party can request extradition of a suspect from the jurisdiction of another party for violations of UNTOC’s requirements to properly identify customers and maintain records for the purpose of detecting and deterring money laundering.4 Under UNTOC, a suspect who violates a customer identification and recordation requirement may be extradited.5

4.5. New OSCE Recommendation 5—Dedicated Courts

Establish a system of domestic courts and prosecutors funded by the UN and staffed by judges and prosecutors vetted by the UN Commission on Crime Prevention and Criminal Justice, dedicated to the adjudication and swift resolution of charges of corruption.

Model conforming language: APUNCAC Article 8.

4.6. New OSCE Recommendation 6—UN Inspectors

Establish an International Commission against Corruption (ICAC), employing duly qualified inspectors funded by the UN, with strong powers to investigate allegations of corruption. Require cooperation with inspectors and protection of inspectors; provide for privileges, immunities, and discipline of inspectors; and include a mechanism to censure noncooperation.

Model conforming language: APUNCAC Articles 6, 7, 12, 13, 14, 15.

4.7. New OSCE Recommendation 7—Obstruction of Justice

Make obstruction of justice a crime that may be investigated by a UN inspector, including any attempt to arrest or interfere with UN inspectors, staff, witnesses, victims or individuals who assist with ICAC investigations, contrary to the wishes of UN inspectors; any attempt to delay or thwart the effort of a UN inspector or surrogate to obtain or execute a warrant for arrest, in excess of the discretionary authority of the judge who receives the request for a warrant; any attempt to delay or thwart the execution of a lawful warrant for arrest presented by a UN inspector or surrogate, contrary to the wishes of the inspector or surrogate; any attempt to delay or thwart the lawful prosecution, trial, disciplinary hearing or oversight hearing of an individual accused of corruption or obstruction of justice, in excess of the discretionary authority of the prosecutor, judge, disciplinary body or oversight agency exercising jurisdiction over the relevant case; or a prosecution, trial, disciplinary hearing or oversight hearing regarding an individual accused of corruption or obstruction of justice that is substantially irregular, violates accepted prosecutorial, judicial, disciplinary or oversight norms and practices, and perverts the course of justice.

Model conforming language: APUNCAC Article 10.

Recommendations 5, 6, and 7 align with the Basel Decision commitment to implement broad reforms involving domestic law enforcement bodies, judicial institutions, international cooperation between national anti-corruption bodies, and cooperation with other relevant international organizations in preventing and combating corruption. Dedicated anticorruption courts would be periodically evaluated by the UN Commission on Crime Prevention and Criminal Justice. Failure of a dedicated anticorruption court or prosecutor to observe the highest standards of judicial or prosecutorial conduct would warrant disciplinary action by the UN Commission on Crime Prevention and Criminal Justice. Such action may include a letter of reprimand, redirection of funding to higher performing courts or prosecutors, or a recommendation to a national judicial council to suspend, demote, or remove a judge or prosecutor whose conduct contributes to unnecessary delays or falls below the highest standards of judicial or prosecutorial conduct.

A precedent and model for the establishment of UN inspectors involves the International Commission against Impunity in Guatemala (CICIG), which was established via a bilateral treaty with the United Nations.6 This “hybrid” UN-backed mission combined international and national capacities working through Guatemalan laws and courts. CICIG successfully investigated and helped prosecute multiple high-ranking Guatemalan officials, ex-military officers, and business elites and resulted in the imprisonment of the sitting president and vice president in 2015 (Call and Hallock 2020). CICIG investigations led to 1540 indictments in 120 cases involving over 70 illicit networks (Call and Hallock 2020). This experience suggests that it is feasible to implement an international agreement that involves intrusive criminal investigations led by UN investigators, even in a country where the rule of law is extremely weak, where powerful and violent criminal cartels have gained control of several government departments, where impunity prevails, and where the prospects for implementing UN inspectors are less than favorable.

UN inspectors could seek a judicial opinion from a judge in the state where the investigation is conducted regarding any alleged act involving obstruction of justice. If a UN inspector subsequently determined that prosecution, discipline, or oversight of an individual accused of obstruction of justice had been perverted, the inspector would prepare and submit a report to the appropriate prosecuting authorities, disciplinary bodies, parliamentary institutions, or other institutions exercising oversight. The inspector would submit the report to be published online by Transparency International.

4.8. New OSCE Recommendation 8—Class Actions

Permit class actions, and permit plaintiffs to seek treble damages.

Model conforming language: APUNCAC Articles 60, 61, 62, 63.

4.9. New OSCE Recommendation 9—RICO

Implement the RICO Act.

Model conforming language: APUNCAC Articles 60, 61, 62.

Recommendations 8 and 9 align with the Basel Decision commitment to “establish and promote practical measures and tools to address all forms and levels of corruption for both the private and the public sectors” (OSCE 2014, p. 2). Recommendation 8 would permit an NGO such as International Justice Mission to file a class action and seek treble damages when citizens have knowledge of corruption. This would provide an incentive for whistleblowers to expose corruption. Recommendation 9 would permit prosecutors to build cases against peripheral individuals such as accountants, attorneys, and financial service personnel who aid and abet money laundering, pressure them into cooperation agreements, and build cases against the criminals who orchestrate the criminal activity.

4.10. New OSCE Recommendation 10—Conflicts of Interest

Establish rules regarding prohibited interests and conduct of public officials, establish reporting rules, establish penalties for violations of those rules, and establish a Conflicts of Interest Board to promulgate rules as necessary to implement those rules, render advisory opinions, receive required financial disclosure statements filed by public servants, receive complaints alleging violations of those rules, and direct a criminal investigator, public prosecutor, or a UN inspector to conduct an investigation of any matter related to the board’s responsibilities.

Model conforming language: APUNCAC Articles 41, 42, 43, 44, 45, 46, 52, 53, 54, 55, 56, 57.

Recommendation 10 aligns with the Basel Decision commitment to address conflicts of interest through enforceable codes of conduct and by establishing and strengthening asset declaration systems applicable to public officials. These rules and regulations seek to control conflicts of interest that would otherwise facilitate corruption.

4.11. New OSCE Recommendation 11—State Assets

Implement APUNCAC Article 47.

Model conforming language: APUNCAC Article 47.

4.12. New OSCE Recommendation 12—Loans

Implement APUNCAC Article 48.

Model conforming language: APUNCAC Article 48.

4.13. New OSCE Recommendation 13—Whistleblowing

Implement APUNCAC Article 51.

Model conforming language: APUNCAC Article 51.

4.14. New OSCE Recommendation 14—Transfer Pricing

Implement APUNCAC Article 50.

Model conforming language: APUNCAC Article 50.

Recommendations 11, 12, 13, and 14 align with the Basel Decision commitment to “establish and promote practical measures and tools to address all forms and levels of corruption for both the private and the public sectors” (OSCE 2014, p. 2). Recommendation 11 seeks to control corruption in the sale of valuable state assets by requiring each recipient in a chain of recipients to post information regarding the true beneficial owner on a publicly accessible website designated by the Conflicts of Interest Board, in a form and manner approved by the Board. Recommendation 12 seeks to control corruption that occurs when “loans” are used to bribe corrupt associates by requiring public servants to report details of any loan extended or received on a secure website designated by the Conflicts of Interest Board in a form and manner approved by the Board. Recommendation 13 would establish an avenue for whistleblowers to report allegations of corruption. Recommendation 14 would prevent multinational firms from manipulating intercompany pricing and reported cost figures in a way that serves to cheat citizens of tax revenue that would otherwise be available to pay for social services, human services, public services, and government infrastructure. Firms that operate within the territory of a participating state would be required to conform to OECD’s Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations, as determined by rule of the Conflicts of Interest Board.

4.15. New OSCE Recommendation 15—Public Procurement

Implement APUNCAC Article 58.

Model conforming language: APUNCAC Article 58.

4.16. New OSCE Recommendation 16—False Claims

Implement APUNCAC Article 59.

Model conforming language: APUNCAC Article 59.

Recommendations 15 and 16 align with the Basel Decision commitment to combat corruption in public procurement. Article 58 establishes procedures where a duly qualified independent monitor would have access to all relevant documents and meetings for the purpose of monitoring public tendering and contracting processes and deterring procurement fraud. Article 59 would provide incentives for whistleblowers to pursue civil actions when they have knowledge of corruption. Article 59 establishes procedures where private individuals who have knowledge of fraud (but were not convicted of criminal conduct arising from their role in the violation) may file a qui tam suit, on behalf of the government, for violations of the FCA. If the government intervenes in the qui tam action, the person bringing the action (the “relator”) is entitled to receive between 15 and 25% of the amount recovered by the government through the qui tam action. If the government declines to intervene in the action, the relator’s share is increased to 25–30%.

4.17. New OSCE Recommendation 17—Campaign Reform

Implement APUNCAC Article 68 regarding campaign reform.

Model conforming language: APUNCAC Article 68.

Recommendation 17 aligns with OSCE commitments and recommendations to implement campaign finance legislation.7 Article 68 is based on a model campaign finance law developed by the Center for Governmental Studies, a nonprofit, nonpartisan organization that helps civic organizations and decision-makers to strengthen democracy and improve governmental processes. Article 68 would reduce the negative influence of large campaign contributions by limiting the size of campaign contributions and establishing a system where competitive candidates who can secure a large number of small contributions receive matching contributions from the public treasury. This effectively increases the resources available to popular candidates and limits the ability of wealthy individuals to outspend their opponents. The law seeks to encourage popular candidates to run against well-financed opponents, thereby serving to moderate the influence of wealthy individuals who may have obtained their wealth through corruption or may seek to preserve their wealth through corruption.

4.18. New OSCE Recommendation 18—Conspiracy

Implement APUNCAC Article 69 regarding conspiracy.

Model conforming language: APUNCAC Article 69.

Article 69 makes it a crime to conspire to commit the crimes outlined above. It is often easier for a prosecutor to prove conspiracy than to prove that the predicate crime was committed.

4.19. New OSCE Recommendation 19—Definitions

Implement APUNCAC Article 70 regarding definitions.

Model conforming language: APUNCAC Article 70.

Definitions regarding the terms employed in the 19 Recommendations are necessary because they determine what is included and excluded when those laws and regulations are applied.

4.20. Summary

The implementation of these 19 recommendations would fill gaps in the international legal and regulatory regime that permit criminals to utilize the international financial system to cover their tracks. Recommendations 1 and 2 would establish a centralized database that would permit investigators to track illicit funds from source to destination. Recommendation 1 would force beneficial owners to reveal their identities, unless front men knowingly elect to risk debarment, fines, and criminal penalties by falsely “certifying” beneficial ownership. This risk of debarment, fines, and criminal penalties does not currently exist because the existing AML regime does not require beneficial owners to certify ownership when funds are sent or received. Forcing front men to certify false information is necessary because it is the only means by which prosecutors can gain the leverage needed to force front men to cooperate in revealing the identities of the criminals orchestrating the criminal activity.

Recommendations 3 and 4 would implement the same type of AML regulations that are effective in the U.S., plus additional regulations that reinforce Recommendations 1 and 2. Recommendations 5 and 6 would establish dedicated anticorruption courts, plus independent, UN-funded inspectors who could not be easily manipulated by powerful domestic elites. Recommendation 7 would make obstruction of justice a crime that could be investigated by a UN inspector. Recommendation 8 would permit an NGO such as International Justice Mission to file a class action and seek treble damages when citizens have knowledge of corruption. Recommendation 9 would permit prosecutors to build cases against peripheral individuals such as accountants, attorneys, and financial service personnel who aid and abet money laundering, pressure them into cooperation agreements, and build cases against the criminals who orchestrate the criminal activity. Recommendation 10 would implement rules and regulations to control conflicts of interest that would otherwise facilitate corruption. Recommendation 11 would control corruption in the sale of valuable state assets. Recommendation 12 would control corruption that occurs when “loans” are used to bribe corrupt associates. Recommendation 13 would establish an avenue for whistleblowers to report allegations of corruption. Recommendation 14 would prevent multinational firms from manipulating intercompany pricing and reported cost figures in a way that serves to cheat citizens of tax revenue that would otherwise be available to pay for social services, human services, public services, and government infrastructure. Recommendation 15 would assist in detecting and deterring procurement fraud. Recommendation 16 would provide incentives for whistleblowers to pursue civil actions when they have knowledge of corruption. Recommendation 17 would reduce the negative influence of large campaign contributions by limiting the size of campaign contributions and establishing a system where competitive candidates who can secure a large number of small contributions receive matching contributions from the public treasury. Recommendation 18 makes it a crime to conspire to commit the crimes outlined above. Recommendation 19 defines key terms.

5. OSCE vs. FATF

A companion article translated APUNCAC into 19 New FATF Recommendations (Yeh 2022a). The rationale is similar—the strategy bypasses the delays and complications that may occur when pursuing an international convention. Implementation of the recommendations via the FATF, or via the OSCE, would avoid the lengthy, time-consuming process of drafting an international convention, resolving disputes about detailed language, and reconciling the discordant views of diverse UN member states. It would avoid the need to build the level of consensus needed for signature and ratification in each member state. Instead, the FATF or the OSCE could simply agree to promulgate a new set of recommendations that are not, in principle, controversial.

However, differences in institutional missions, histories, orientation, and structures suggest differences in receptivity to the 19 proposed recommendations, differences in expected implementation, and differences in expected outcomes. The FATF has traditionally focused on regulations to control money laundering and financial crime. Its scope is narrower, compared to the OSCE, which embraces not only AML regulations but reforms to combat corruption in domestic legal systems, corruption in elections, corruption in public procurement, conflicts of interest, and to implement “practical measures and tools to address all forms and levels of corruption for both the private and the public sectors” (OSCE 2014, p. 2).

Although all 19 recommendations are arguably necessary to combat corruption, the FATF has narrowly defined its mission to focus on measures to fight money laundering and financial crime. The FATF, in comparison with the OSCE, may be especially supportive of the AML recommendations advanced in this article, may possess more expertise regarding AML regulations, and may be better positioned to implement AML regulations. Significantly, the FATF has established “grey” and “black” lists of countries that have failed to adhere to FATF AML standards. The threat of being placed on either list puts pressure on both member and nonmember countries to conform to FATF recommendations and standards. This implies that the FATF would be more effective than the OSCE in eliciting compliance. For this reason, the recommendations that focus on AML regulation would be best implemented by the FATF, instead of the OSCE. However, to the extent that the OSCE-participating states and FATF member countries agree on those recommendations, dual recommendation by both sets of countries (and both organizations) would have a mutually reinforcing effect.

The OSCE, in comparison with the FATF, may be more receptive to the broad range of recommendations advanced in this article, more likely to implement all 19 recommendations, and more likely to achieve the type of structural changes that are needed to root out systemic corruption. Arguably, systemic corruption persists when those in power manipulate elections, manipulate the legal system, and exploit conflicts of interest. This type of manipulation demands stronger, broader, and deeper reforms than the measures contemplated by the FATF. There is a need for independent inspectors whose careers cannot be easily manipulated by domestic authorities. There is a need for dedicated anticorruption courts, prosecutors, and judges vetted by the UN Commission on Crime Prevention and Criminal Justice. There is a need to provide incentives for whistleblowers to pursue civil actions when they have knowledge of corruption. There is a need to permit class actions and the recovery of treble damages. There is a need to make obstruction of justice a crime that may be investigated by a UN inspector. There is a need to implement RICO to permit prosecutors to pursue peripheral individuals and turn them into cooperating witnesses, to implement rules and regulations to control conflicts of interest that would otherwise facilitate corruption, and to control procurement fraud and corruption in the sale of valuable state assets. There is a need to reduce the negative influence of large campaign contributions by limiting the size of campaign contributions and establishing a system where competitive candidates who can secure a large number of small contributions receive matching contributions from the public treasury.

The OSCE is uniquely suited to adopt these reforms. Some of the measures have already been adopted by the U.S. and other major European countries, suggesting that the changes are feasible, practical, and sensible. The OSCE has an opportunity to provide guidance and leadership for countries that have not adopted these reforms. Their adoption by the OSCE could potentially set a new standard, provide a basis for evaluating progress in fighting systemic corruption, and pave the way for adoption by UN member states that would otherwise feel little pressure to conform.

6. OSCE’s Role

The OSCE has been described as “one of the most important organizations in Europe” (Gyarmati 2005, p. 14). Although the OSCE’s mission is driven by the objective of preserving peace and security, the OSCE has conceptualized its mission broadly to include a “basket” of humanitarian concerns. Furthermore, “it is exactly in the human dimension where the OSCE activities have been most successful” (Świtalski 2005, p. 57). This is driven by an understanding that unresolved humanitarian issues contribute to instability and conflict that threatens peace and security.

In recent years, it has become increasing clear that a close relationship exists between ethnic conflicts, organized crime, and the smuggling of human beings, weapons, and drugs. These three elements constitute an almost ideal environment for terrorist activities.

(Süssmuth 2005, p. 51)

The OSCE recognizes the need for a comprehensive approach that encompasses reforms in domestic justice systems, criminal investigation, criminal prosecution, law enforcement, and associated legal frameworks:

To fight terrorism effectively we need to address its economic, social, political, cultural and ideological causes [and] to build institutions based on the rule of law, particularly in the areas of justice and law enforcement … Law enforcement, courts, public prosecutors, prison systems, relevant legislation, administrative authorities, and personnel training facilities are all so closely interrelated that they can only be placed on a stable legal foundation in the framework of integrated security sector reforms. The OSCE is active in numerous individual fields within this area of activity and has accumulated considerable expertise here.

(Süssmuth 2005, p. 51)

The OSCE recognizes the link between organized crime, corruption, and the necessity of addressing these root causes of instability and conflict through reform of domestic criminal justice systems and law enforcement. The focus on good governance, anticorruption, and reform of related domestic legal frameworks is driven by this recognition.

The OSCE operates in partnership with the European Union (EU). The EU has established a priority of fighting corruption: “Fighting corruption and combatting organised crime, while protecting human rights and fostering inclusive growth, remains a priority for the EU” (EU 2021, p. 2). All 27 EU member states are also participating states of the OSCE. Contributions from EU member states account for more than two thirds of the OSCE budget, and the EU constitutes one of the biggest donors of extrabudgetary contributions for a large number of OSCE projects and programmes (Paunov 2015, p. 339). The EU is represented in all OSCE decision-making bodies by the delegation of the country chairing the rotating Presidency of the Council of the EU (Paunov 2015, p. 339). Cooperation takes place in a multitude of policy areas, including judicial and police reform, public administration, and anti-corruption measures, as well as democratization, institution-building, and human rights (Paunov 2015, p. 339).

Three major strategic objectives of the EU and its OSCE partners are described in the European Security Strategy (ESS) document, adopted by the European Council in December 2003 (EU 2016; Paunov 2015, pp. 343–44). The third strategic objective identified by the ESS is “an international order based on effective multilateralism” (Paunov 2015, p. 344). The ESS highlights the important role of the OSCE in strengthening global governance. The ESS promulgates the strategy of “spreading good governance, supporting social and political reform, dealing with corruption and abuse of power, establishing the rule of law and protecting human rights” (Paunov 2015, p. 344).

Substantial economic, social, and security benefits make EU membership highly desirable. As a consequence, nonmember countries are highly motivated to fulfill the “Copenhagen criteria”, which candidate countries are required to satisfy before they can become members of the EU. Countries wishing to join the EU are required to exhibit stable institutions “guaranteeing democracy, the rule of law, human rights and respect for and protection of minorities” (EC 1993). The criteria are aligned with the ESS criteria—good governance, social and political reform, and measures to deal with corruption and abuse of power. In cases where candidate countries have made insufficient progress, the EU has postponed their accession to ensure compliance with its norms (Paunov 2015, p. 350). Thus, nonmember countries are highly motivated to implement reforms that demonstrate stable institutions, good governance, the rule of law, and measures to deal with corruption and abuse of power. EU membership serves as a powerful carrot that elicits adherence to these norms and standards and motivates nonmember countries to adopt EU/OSCE policy recommendations to promote good governance and combat corruption.

The OSCE’s focus on good governance and reform of domestic legal frameworks is aligned with its mandate. The OSCE, unlike other intergovernmental organizations, is unique in its mandate to address inadequacies in internal domestic institutions and legal frameworks. Rita Süssmuth, former Vice President of the OSCE Parliamentary Assembly, emphasized this point in a statement delivered in connection with a colloquium meeting of the Eminent Persons Group on the Future of the OSCE:

Indisputably, the OSCE is the only organization with legitimate responsibility for creating legal standards for all of Europe.

(Süssmuth 2005, p. 49)

Referring to the OSCE’s mandate, she stated:

At its meeting of foreign ministers in Prague in 1991, the CSCE granted itself the right, in cases of clear, severe, and repeated violations of OSCE obligations, to intervene in the internal affairs of the country in question by political means and outside the territory of that country. Here the OSCE countries recognized the legitimacy of interference in their internal affairs in the OSCE framework and only in this framework.

(Süssmuth 2005, p. 49)

This mandate underpins the OSCE’s legitimacy in promulgating reforms of domestic legal frameworks regarding criminal justice, law enforcement, and anticorruption. OSCE-participating states have previously agreed that this role is proper and legitimate.

The significance of this can hardly be overstated. If international civil society organizations wish to influence domestic legal frameworks across a broad array of influential nation states, with the objective of fighting corruption, poverty, and violations of human rights, OSCE policy is a good place to start.

6.1. A Potential Barrier

A caveat is that the OSCE, like any other large intergovernmental organization, is not monolithic. In particular, the Russian Federation has objected to the OSCE’s focus on humanitarian concerns, accusing the OSCE of double standards, political manipulation, biased approaches to certain states, and the use of human rights issues to apply political pressure (Kashlev 2005, p. 19). In general, all OSCE bodies decide by consensus, which means that no participating state raises objections. Deviations from the consensus principle are foreseen in cases of “clear, gross, and uncorrected” violations of OSCE commitments (Borchert and Zellner 2003, p. 8; CVCE 2016, p. 2; Schlager and Hope 2020, p. 2). In this case, the so-called Prague mechanism of “consensus minus one” can be activated against a participating state (Borchert and Zellner 2003, p. 8; CVCE 2016, p. 2; Schlager and Hope 2020, p. 2). Similarly, the Ministerial Council can decide by “consensus minus two” in cases where two states cannot agree on resolving a dispute (Borchert and Zellner 2003, pp. 8–9; CVCE 2016, p. 2). However, in the absence of “clear, gross, and uncorrected” violations of OSCE commitments, Russia can block policy statements that it disagrees with.

A problem, therefore, is that Russia may seek to block certain recommendations, such as Recommendation 6, regarding the establishment of an independent body of UN-supported anticorruption inspectors.8 A potential solution would be to change the OSCE’s policy of operating by complete consensus. This possibility was repeatedly raised at the June 2005 colloquium meeting of the Eminent Persons Group on the Future of the OSCE, held in Washington, DC. Ambassador Leif Mevik offered a potential compromise, suggesting an “opt-out arrangement” where a state that is not in agreement would simply decide not to be part of the decision to be made (Mevik 2005, p. 21). This solution would permit Russia to opt out of Recommendation 6 but allow the OSCE to adopt the recommendation across the remaining 56 participating states. Ambassador Mevik’s solution would greatly improve the OSCE’s capacity to achieve reform across willing participating states.9

In March 2021, the OSCE hosted a meeting of more than 100 OSCE officials and parliamentarians, moderated by former OSCE Secretary General Lamberto Zannier. The meeting included OSCE Parliamentary Assembly Secretary General Roberto Montella, President Peter Lord Bowness, and OSCE Parliamentary Assembly Vice-Presidents Margareta Cederfelt, Kari Henriksen, and Azay Guliyev. The focus of the meeting was a discussion of the strengths and weaknesses of the OSCE’s principle of consensus-based decision making. Zannier, Bowness, and Henriksen emphasized that there must be a process to ensure that the consensus rule is not abused (OSCE 2021). In the discussion, comments were made that the OSCE needs majorities that make decisions rather than minorities that block decisions, and options such as consensus-minus-one and consensus-minus-two procedures should be explored (OSCE 2021). Participants stated that for the OSCE to succeed, it must be empowered to use its entire toolbox, and if the consensus principle stands in the way, it should be reconsidered (OSCE 2021).

Regardless, the Russian Federation has explicitly stated its support for the OSCE’s efforts to combat corruption:

Russia has traditionally supported the OSCE’s efforts to promote best-practice standards and tools for combating corruption on the basis of existing commitments in this area, including the relevant decisions adopted by the Ministerial Council in Sofia and Basel in 2004 and 2014, respectively, and the Dublin Declaration on Good Governance of 2012.

(Lukashevich 2021, p. 1)

The Russian Federation has an interest in fighting terrorism10 and has cooperated with FATF recommendations to combat money laundering and implement AML/CFT regulations. The FATF asserts that:

[Both Israel and Russia] committed at the highest political level to drive through the necessary reforms. Each made the fight against money laundering and terrorist financing a priority and successfully implemented a robust framework of legal, law enforcement and operational measures.

(FATF 2019, p. 66)

This record suggests that Russia may also support Recommendations 1, 2, 3, and 4. In addition, Recommendation 5 and Recommendations 7 through 19 might be acceptable to Russia since domestic implementation within Russia would be controlled by Russian authorities. The OSCE can pass resolutions, but domestic implementation is controlled by domestic authorities. Although this results in uneven implementation of OSCE policies and recommendations across the 57 participating OSCE states, it permits the adoption of policies that might otherwise be rejected by individual states. Uneven implementation may be the price of agreement.

Regardless, the OSCE has demonstrated its willingness and capacity to pass resolutions, despite opposition by the Russian Federation, in cases of “clear, gross, and uncorrected” violations of OSCE commitments. In February and March 2014, Russia invaded and subsequently annexed the Crimean Peninsula from Ukraine, triggering international outrage and condemnation (Myers and Barry 2014). In March 2014, the UN General Assembly rebuked Russia, passing resolution 68/262, affirming the sovereignty and territorial integrity of Ukraine.11 In February 2015, Russia signed an agreement to “remove unlawful military formations and military hardware, as well as militants and mercenaries, from the territory of Ukraine” (Tagliavini et al. 2015) but failed to observe the agreement. In July 2015, the OSCE approved a resolution condemning Russia’s “unilateral and unjustified assault on Ukraine’s sovereignty and territorial integrity” (OSCE 2015b).

In July 2017, OSCE participating States agreed upon the Minsk Declaration and Resolution on Restoration of the Sovereignty and Territorial Integrity of Ukraine (OSCE 2017, pp. 30–34). In strongly worded language, OSCE participating States reiterated their

condemnation of the temporary occupation of the Autonomous Republic of Crimea and the city of Sevastopol by the Russian Federation and the ongoing Russian hybrid aggression against Ukraine in Donbas;

(OSCE 2017, p. 32)

recognized

that the Russian Federation has completely failed to implement the provisions of the previous OSCE Parliamentary Assembly Resolutions on violations of fundamental Helsinki principles and international norms on human rights in the temporarily occupied Autonomous Republic of Crimea and the city of Sevastopol;

(OSCE 2017, p. 32)

and urged

the Russian Federation to fully observe its obligations under international law as an occupying power and to implement UN General Assembly resolution 68/262 of 27 March 2014 on the Territorial Integrity of Ukraine, the Declaration of the 1034th (special) OSCE Permanent Council meeting of 20 January 2015, UN Security Council Resolution 2202/2015 of 17 February 2015 concerning the Package of Measures for the Implementation of the Minsk Agreements, and UN General Assembly resolution 71/205 of 19 December 2016 on the Situation of Human Rights in the Autonomous Republic of Crimea and the City of Sevastopol (Ukraine).

(OSCE 2017, p. 32)

The OSCE urged

the Russian Federation to reverse the temporary occupation of the Autonomous Republic of Crimea and the city of Sevastopol, to withdraw the Russian occupation forces from the temporarily occupied Autonomous Republic of Crimea and the city of Sevastopol and to bring them back under the control of the Government of Ukraine;

(OSCE 2017, p. 32)

and urged

the Russian Federation to stop sponsoring terrorist activities in Ukraine through the inflow of fighters, money, and weapons across the non-Government controlled segment of the Ukrainian-Russian state border, and to terminate all support for illegal armed formations in certain areas of the Donetsk and Luhansk regions of Ukraine that engage in acts of terrorism in Ukraine.

(OSCE 2017, p. 33)

The Minsk Declaration and Resolution was adopted despite the opposition of the Russian Federation. The OSCE’s policy of operating by consensus did not prevent the OSCE from adopting resolutions opposed by Russia, because Russia’s clear, gross, uncorrected violations of its OSCE commitments triggered the clause that permitted the OSCE to act despite Russian opposition. Russia’s actions in Ukraine, dating back to 2014, violate the entire decalogue of Helsinki principles on which the OSCE is built.

6.2. A Potential Solution

In February 2022, Russia launched a full-scale invasion of Ukraine (New York Times 2022; Psaropoulos 2022). Hundreds of thousands of people were forced to flee the country in search of safety (Psaropoulos 2022). Deaths and injuries mounted as a result of attacks by Russian forces (Psaropoulos 2022).

Russia’s invasion of Ukraine constitutes clear, gross, and uncorrected violations of its OSCE commitments regarding the use of force, good governance, and rule of law. This triggers the “consensus minus one” rule that permits the OSCE to support the 19 proposed recommendations regardless of Russian objections, despite the general rule that all OSCE decisions must be made through consensus. In the absence of this trigger, it would be necessary to obtain Russia’s consent to any OSCE decision. However, since the rule was triggered, it is not necessary to obtain Russia’s consent. This offers a solution to the problem that Russia would likely object to some of the 19 proposed OSCE recommendations.

This would permit the OSCE to issue a decision in support of the 19 recommendations proposed in this article to implement the OSCE’s commitments regarding good governance. The OSCE could take the position that the Russian invasion and occupation of Ukraine justifies invocation of the “consensus minus one” clause and the OSCE’s adoption of strong recommendations to counter the financing of terrorism and combat the diversion of public resources for purposes that are inconsistent with OSCE commitments to good governance and the rule of law. If Russia has been employing state resources and military forces to occupy a sovereign OSCE state and sponsor terrorism in that state, the OSCE is justified in adopting recommendations to combat the financing of terrorism, including the adoption of Recommendation 6 regarding the establishment of UN inspectors, regardless of Russian opposition.12

In essence, Russia’s invasion of Ukraine permits the OSCE to adopt the 19 proposed OSCE recommendations regardless of Russian opposition. The rule that all OSCE decisions must be made through consensus no longer applies. Instead, the “consensus minus one” rule is triggered, permitting the OSCE to adopt the 19 proposed OSCE recommendations. This eliminates the barrier that would otherwise exist to the implementation of the proposed OSCE recommendations. The invocation of the “consensus minus one” rule explains why it is feasible for the OSCE to adopt the 19 proposed OSCE recommendations even though Russia would almost certainly object.

The Russian Federation might choose not to accept or cooperate with OSCE resolutions, but this would not limit the application and implementation of the 19 proposed OSCE recommendations to promote good governance and combat corruption, money laundering, and terrorist financing in the remaining 56 OSCE-participating states. Although Russian disregard of OSCE recommendations is undesirable, there would be substantial benefits to the implementation of the recommendations outside of Russia. The objective would be to set international standards for the rest of the world. The 56 OSCE-participating states include many of the most influential UN member states. These states set standards for the international financial system, promulgate regulations that shape international activity and relations, and exert de facto control over access to international aid, trade, and debt relief through their influence over other nations, the World Bank, and the International Monetary Fund. The influence of these 56 participating states extends far beyond their geographical borders. Their adoption of the 19 proposed OSCE recommendations would have far-reaching effects in promoting good governance and reducing the scope for corruption, money laundering, and terrorist financing, and would advance efforts to fight poverty, promote economic and social development, and restore human rights in areas of the world where corruption and impunity prevail.

7. Conclusions

The OSCE’s history, mission, orientation, and structure align in support of broad reforms that promote good governance, social and economic development, peace, security, and human rights. The Helsinki Accords, the emphasis on international cooperation, and the focus on humanitarian and human rights issues align with the type of ambitious reforms envisioned by APUNCAC. The OSCE has embraced not only AML/CFT regulations but structural reforms to combat corruption in domestic legal systems, corruption in elections, corruption in public procurement, and conflicts of interest, and to implement “practical measures and tools to address all forms and levels of corruption for both the private and the public sectors” (OSCE 2014, p. 2). The OSCE’s mission, vision, and focus on good governance are strongly aligned with APUNCAC’s articles and 19 recommendations that seek to implement RICO, the False Claims Act, a model campaign finance law, and New York’s conflict of interest rules and regulations.

The focus on good governance acknowledges that peace, stability, human rights, and economic and social development are at risk when the institutions of government are manipulated by corrupt elites for their own purposes. Corruption permits bad actors to insinuate themselves into positions of power, where they multiply their influence, hijack the resources of the state for their own ends, and manipulate state institutions in pursuit of private profit. They may gain control of the office of the president, where they may control nuclear weapons, the capacity to make war, the capacity to unleash biological and chemical weapons, the capacity to sponsor terrorist activities, and the capacity to wreak havoc and undo decades of progress in promoting peace, stability, human rights, and economic and social development.

The OSCE recognizes that good governance begins with a strong legal framework that combats corruption, organized crime, false claims, corruption in government administration, corruption in public procurement, election rigging, and conflicts of interest. Perhaps more than any other intergovernmental institution, the OSCE’s mission and structure are aligned with APUNCAC’s articles and 19 recommendations. If OSCE-participating states and the international community desire to make progress in fighting corruption and the social ills associated with corruption, perhaps the way forward would be to work toward OSCE agreement and implementation of these recommendations.