August 17, 2021
Financial Disclosure: Identifying and Remediating Conflicts of
Interest in the Executive Branch
When taking an official action (e.g., making decisions or
(e.g., President, Vice President, House of Representatives,
recommendations), American public servants are expected
and Senate) are required to file financial disclosure forms
to put the government’s interests ahead of their own. The
within a specified period. Generally, this is within 30 days
Ethics in Government Act of 1978 (5 U.S.C. Appendix), as
of declaring their candidacy or May 15, whichever is later.
amended, is based upon this principle and requires certain
employees to file annual financial disclosure statements.
Once financial disclosure forms are filed with the
Federal agencies use the disclosed information to identify
employee’s agency (the House or Senate for legislative
and remediate real or perceived conflicts of interest, as
branch employees, Members of Congress, or candidates for
necessary.
the House or Senate; or the Administrative Office of the
Courts for the judicial branch), the DAEO reviews the
filings for compliance, completeness, and to identify any
real or perceived conflicts of interest. Individuals who fail
Every Federal employee serves not one but many
to file or file false reports are subject to statutory penalties
masters.... Manifestly, the principle proscribing
(5 U.S.C. Appendix §104).
conflicts of interests is aimed not at these normal
multiple al egiances of employee-citizens or at direct
There are two types of financial disclosure reports—public
controversies between them and their employer-
(OGE Form 278) and confidential (OGE Form 450). The
Government, but only at such activities as wil impair
requirement to file a public or confidential report largely
the integrity of the Federal service and deprive the
depends on the individual’s governmental role. Both public
Government of the ful performance for which it has
and confidential reports require the disclosure of similar
bargained.
information. Each filer reports information about their
—House Committee on the Judiciary,
assets, income, employment agreements, transactions,
Subcommittee No. 5, March 1, 1958, p. 1.
liabilities, and gifts for themselves, their spouse, and
dependent children.
Identifying Conflicts of Interest
Public Financial Disclosure
Federal law (18 U.S.C. §208) prohibits government
Public financial disclosure filings are available for public
employees from participating “personally and substantialy”
inspection. Public filers (5 C.F.R. §2634.202) include
in any covered activity in which the employee, spouse,
minor child, general partner, or previous organization has a
the President;
financial interest. If a covered official is negotiating future
the Vice President;
employment, they are prohibited from participating in
certain activities with that organization. Pursuant to the
executive branch employees, including Special
Ethics in Government Act and regulations issued by the
Government Employees (SGE) who are classified above
Office of Government Ethics (OGE), compliance with laws
GS-15 of the General Schedule or at a “rate equal to or
prohibiting financial conflicts of interest is primarily
greater than 120% of the minimum rate of basic pay for
achieved with the assistance of each federal agency’s
GS-15”;
Designated Agency Ethics Official (DAEO). The DAEO, a
position established in the Ethics in Government Act and
uniformed service members paid at or in excess of O-7;
accompanying regulations, is tasked with, among other
administrative law judges;
things, training agency staff on ethics matters; ensuring
compliance with financial disclosure requirements; and
executive branch employees who are in a position
reviewing, identifying, and assisting in the remediation of
“excepted from the competitive service by reason of
conflicts of interest.
being of a confidential or policy-making character”;
the Postmaster General, the Deputy Postmaster General,
Current law (5 U.S.C. Appendix) and regulations (5 C.F.R.
each Governor of the United States Postal Service Board
§2634.201) require covered employees to file annual
of Governors;
financial disclosure reports on or before May 15 each year.
Newly hired covered employees must file within 30 days of
the Director of OGE and each agency’s designated
appointment, and nominees must complete their forms
agency ethics officer; and
within five days of the White House’s transmission of their
nomination to the Senate. Candidates for federal office
https://crsreports.congress.gov
Financial Disclosure: Identifying and Remediating Conflicts of Interest in the Executive Branch
civilian employees employed in the Executive Office of
individuals, (e.g., the DAEO, nominees and appointments
the President and holding a commission of appointment
requiring presidential appointment and Senate confirmation,
from the President.
and employees of the Executive Office of the President)
filings are forwarded by the agency to OGE for final
Public disclosure filings for the most senior officials in the
certification.
executive branch—the President, Vice President, and
appointees and nominees to positions classified at Level I
If upon review the DAEO determines a conflict of interest
and Level II of the Executive Schedule—are available
exists, they can, if necessary, negotiate with the filer to
directly from the OGE website. All other public financial
remedy the conflict. There are several remediation options
disclosure statements can be accessed using OGE Form
(5 C.F.R. §2634.605(b)(6)), including recusal, divestiture,
201. For 2020, OGE reported that there were 26,889 public
resignation, waiver, or the establishment of a qualified blind
filers.
or diversified trust (5 C.F.R. §2634.802(a)). Remediation
efforts can culminate in a written ethics agreement.
Confidential Financial Disclosure
Confidential financial disclosure filings are not available
Disqualification (Recusal)
for public inspection. Confidential filers (5 C.F.R.
Because government decisionmaking generally requires
§2634.904) are largely determined by level of pay, type of
impartiality (5 C.F.R. §2635.501), an identified conflict of
work done, and level of responsibility. Covered employees
interest may be remediated through recusal. In this case, the
file confidential disclosure reports with their agency.
filer would not participate in a “particular matter” involving
Confidential financial disclosure filers
specific parties that would affect the financial interests of
the filer or a member of their household (spouse or
are classified at or below GS-15 or do not meet the pay
dependent child).
or classification threshold for public filing;
Divestiture
participate in certain government activities related to
If recusal is not reasonable in a given circumstance, a filer
contracting; procurement; or administering or
also has an option to divest (e.g., sell) the asset that puts the
monitoring grants, subsidies, licenses, or other federally
filer in conflict with their governmental function. Often,
conferred financial or operational benefits; and
divesture can occur without financial harm. In limited
engage in certain activities related to decisionmaking or
cases, the filer can request a certificate of divestiture under
the approval of decisions, making recommendations,
5 C.F.R. §2634, Subpart J to “minimize the burden that
conducting investigations or audits, or rendering advice
would result from paying capital gains tax on the sale of
or opinions.
assets to comply with conflict of interest requirements.”
Special government employees (SGEs; 18 U.S.C. §202) are
Waivers
generally required to file confidential financial disclosure
In certain situations, waivers can be granted for conflicts of
reports (5 C.F.R. §2634.901).
interest. Federal law (18 U.S.C. §208(b)) and regulation (5
C.F.R. §2640) provide conditions when waivers might be
For 2020, OGE reported that there were 396,867
given. For example, individuals might receive a waiver for
confidential filers.
“financial interests which are too remote or too
inconsequential to affect the integrity ... of the employee.”
Periodic Transaction Reporting
In 2012, the STOCK Act (P.L. 112-105) required the
Blind or Diversified Trusts
“prompt reporting of financial transactions.” The law
In some circumstances, employees may use a qualified
requires both public and confidential filers to report
blind trust or a qualified diversified trust “to reduce real or
financial transactions (e.g., stocks, bonds, commodity
apparent conflicts of interest” (5 C.F.R. §2634.401). In
futures, and other securities) that exceeded $1,000 within
these cases, an independent trustee or similar individual is
45 days of making the transaction. Periodic transaction
appointed “to administer the trust and to manage trust assets
reports are filed with the employee’s agency, the same as
without participation by, or the knowledge of, any
annual financial disclosure.
interested party or any representative of an interested
party.”
Remediating Conflicts of Interest
Once a covered employee files a public or confidential
Reassignment/Resignation
financial disclosure report with the agency, the DAEO
If a conflict of interest cannot be remediated or if the filer
reviews the filing to ensure its completeness and to identify
does not want to recuse or divest, and a waiver is not
holdings or liabilities that might violate or appear to violate
available, the employee could request a transfer, a
federal law, executive orders, or agency-specific statues or
reassignment, or a limitation of duties, or resign.
regulations (5 C.F.R. §2634.605). The DAEO must
complete the review within 60 days.
For more information about executive branch ethics
financial disclosure, see CRS In Focus IF10634, Office of
Following the review, the DAEO will certify the filing. If
Government Ethics: A Primer.
the DAEO does not believe they have enough information
to certify the filing or if the filing is incomplete, they can
Jacob R. Straus, Specialist on the Congress
ask the filer for additional information. For certain
IF11904
https://crsreports.congress.gov
Financial Disclosure: Identifying and Remediating Conflicts of Interest in the Executive Branch
Disclaimer
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congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress.
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https://crsreports.congress.gov | IF11904 · VERSION 1 · NEW