A tenth of the world’s wealth could be hidden in offshore financial assets, preventing governments from collecting their fair share of taxes. The persistence of illicit financial flows, from transnational organised crime to tax abuse, continues to stand in the way of a truly inclusive, stable, equitable future. Illicit transactions are found everywhere, but they have a much heavier impact on developing countries.
So says a report launched today by the UN High Level Panel on International Financial Accountability, Transparency and Integrity for Achieving the 2030 Agenda (FACTI Panel) calls for a cooperative international framework to combat corruption, tax evasion, money laundering and other financial crimes. The Panel makes 14 recommendations, and is asking governments to agree to a Global Pact for Financial Integrity for Sustainable Development; visit https://www.factipanel.org/report.
Dalia Grybauskaitė, FACTI co-chair is a former president of Lithuania. She said: “A corrupt and failing financial system robs the poor and deprives the whole world of the resources needed to eradicate poverty, recover from COVID and tackle the climate crisis.”
The report argues that illicit financial flows (IFFs) — from tax abuse, cross-border corruption, and transnational financial crime — drain resources from sustainable development. “They worsen inequalities, fuel instability, undermine governance, and damage public trust. Ultimately, they contribute to states not being able to fulfil their human rights obligations.”
To address shortcomings, the report suggests an ‘entire ecosystem approach’. It says: “IFFs are a systemic problem requiring a systemic solution. A web of international instruments and institutions has grown organically over time, responding to a wide variety of interests in the fields of tax cooperation, anti-money-laundering, and anti-corruption. Yet, they leave gaps.”
Global governance needs improvement, the report adds, with fully inclusive bodies for tax and the fight against money-laundering to match the one that exists for combatting corruption. Among its recommendations, on transparency the report says that international anti-money-laundering standards should require that all countries create a centralised registry for holding beneficial ownership information on all legal vehicles. And the panel wants to see more international co-operation, and an end to ‘information sharing asymmetries in relation to information shared for tax purposes’.
As for the covid pandemic, the report says that it has sharpened divides and shown deficiencies; the pandemic threatens to reverse hard-won progress in developmental gains. “And it has brought the most vulnerable to the brink,” as for example global advances in combating child labour are likely to be reversed.
You can download the 85-page report at https://www.factipanel.org/documents.
Comment
It is imperative that this is converted into action by the international community, according to an anti-corruption campaign group.
Gillian Dell, Head of Conventions Unit at Transparency International, said: “We welcome this important action-orientated report and are glad to see such a high degree of alignment with Transparency International’s recommendations, particularly in the areas of corporate transparency, asset recovery and foreign bribery. The FACTI Panel has shown real commitment to hearing from civil society experts, and the report rightly calls for effective engagement with civil society in policy making forums. Having given the panel its mandate, it is now imperative that the international community acts on the concrete proposals set out in the report.”
See also a TI blog last year.
