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Toronto G-20 summit silent on illicit financial outflows from developing countries | The G-20 Summit held in Toronto June 27 and 28 was heavy on promises and lean on concrete action items, notes the Task Force on Financial Integrity and Economic evelopment. While the G20 expressed a strong desire to "close the development gap," increase
transparency,and tackle corruption and money laundering, there was a notable lack
of language indicating an understanding of the interconnected nature of these
different problems. "We are disappointed that there was not an acknowledgment
of the importance of curtailing illicit financial outflows from developing countries
in the official statement," said Global Financial Integrity director Raymond Baker.
"The G20 seems intent on increasing official development assistance and pumping
money into other lending bodies for development work but the annual loss of one
trillion dollars a year from developing countries will continue to dwarf development
aid and undermine all efforts to foster robust and sustained economic development
until corrective action is taken." In September 2009 the Task Force prepared a
comprehensive policy paper with recommendations for curtailing illicit financial
outflows from developing countries based on combating corruption and money laundering,
dismantling bank secrecy, and fostering more rigorous reporting by multinational
corporations. Key policy recommendations include: - Country-by-country reporting
by multinational corporations of sales, profits, and taxes paid in all jurisdictions
of operation; - Reduce abusive transfer pricing, tax evasion; - Require disclosure
of the beneficial ownership of companies, and the beneficiaries of trusts and
foundations; - Automatic exchange of tax information; - Stronger due diligence
requirements on banks, better enforcement of these requirements; - Harmonizing
predicate offenses for money laundering. The measures set forth by the Task Force
would directly address several of the G-20's key global priorities. Making multinational
corporations and banks more transparent would significantly hinder money laundering,
tax evasion, and corruption by making it difficult to impossible to launder and
hide the proceeds of these illicit activities. New Actions: Two notable action
items from the official summit statement are the establishment of two working
groups tasked with addressing issues of corruption and development. Statement
on Anti-Corruption Working Group: We agree that corruption threatens the integrity
of markets, undermines fair competition, distorts resource allocation, destroys
public trust and undermines the rule of law. We call for the ratification and
full implementation by all G20 members of the United Nations Convention against
Corruption (UNCAC) and encourage others to do the same. We will fully implement
the reviews in accordance with the provisions of UNCAC. Building on the progress
made since Pittsburgh to address corruption, we agree to establish a Working Group
to make comprehensive recommendations for consideration by Leaders in Korea on
how the G20 could continue to make practical and valuable contributions to international
efforts to combat corruption and lead by example, in key areas that include, but
are not limited to, adopting and enforcing strong and effective anti-bribery rules,
fighting corruption in the public and private sectors, preventing access of corrupt
persons to global financial systems, cooperation in visa denial, extradition and
asset recovery, and protecting whistleblowers who stand-up against corruption.
Development Issues Working Group: Narrowing the development gap and reducing poverty
are integral to our broader objective of achieving strong, sustainable and balanced
growth and ensuring a more robust and resilient global economy for all. In this
regard, we agree to establish a Working Group on Development and mandate it to
elaborate, consistent with the G20's focus on measures to promote economic growth
and resilience, a development agenda and multi-year action plans to be adopted
at the Seoul Summit. Some notable language on money laundering and tackling tax
havens in the G20 statement center around the delegation of monitoring and regulatory
action to the Financial Action Task Force (FATF): We fully support the work of
the Financial Action Task Force (FATF) and FATF-Style Regional Bodies in their
fight against money laundering and terrorist financing and regular updates of
a public list on jurisdictions with strategic deficiencies. We also encourage
the FATF to continue monitoring and enhancing global compliance with the anti-money
laundering and counter-terrorism financing international standards. We agreed
to consider measures and mechanisms to address non-cooperative jurisdictions based
on comprehensive, consistent and transparent assessment, and encourage adherence,
including by providing technical support, with the support of the international
financial institutions (IFIs). We fully support the work of the Global Forum on
Transparency and Exchange of Information for Tax Purposes, and welcomed progress
on their peer review process, and the development of a multilateral mechanism
for information exchange which will be open to all interested countries. Since
our meeting in London in April 2009, the number of signed tax information agreements
has increased by almost 500. We encourage the Global Forum to report to Leaders
by November 2011 on progress countries have made in addressing the legal framework
required to achieve an effective exchange of information. We also welcome progress
on the Stolen Asset Recovery Program, and support its efforts to monitor progress
to recover the proceeds of corruption. We stand ready to use countermeasures against
tax havens. The Task Force is heartened to see that the G20 continues to prioritize
economic development as part of its broader work restructuring the global financial
system. But the official statement from Toronto reveals a continued failure to
grasp key linkages between financial opacity in the global financial system and
illicit financial outflows from developing countries. The Task Force hopes that
the policy recommendations to be presented by the new Working Groups on development
and anti-corruption measures in Seoul reflect this interconnectivity and incorporate
elements of the Task Force prescription. The Task Force on Financial Integrity
and Economic Development is a consortium of governments and research and advocacy
organizations focused on achieving greater transparency in the global financial
system for the benefit of developing countries. Task Force members include: Christian
Aid, the European Network on Debt and Development (Eurodad), Global Financial
Integrity, Global Witness, Tax Justice Network, Tax Research LLP, and Transparency
International. |
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