Global Financial Integrity

 

G20 Commits to Addressing Illicit Financial Flows, Links Tax Haven Secrecy to Poverty

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Clark Gascoigne, +1 202 293 0740 ext. 222

More Needs to Be Done to Implement Automatic Exchange of Tax Information-GFI

Summit Declaration Calls for More Work to Prevent Abuse of Corporate Vehicles

WASHINGTON, DC – Global Financial Integrity (GFI) praised the G20 today for its commitment to tackle the issue of illicit financial flows and crack down on tax haven secrecy.  In the final declaration and its appendices published at the conclusion of a two-day summit in Cannes, the 20 largest economies committed to “deal effectively with tax havens and non cooperative jurisdictions including the fight against illicit capital flows considering their impact on development.”

“We are thrilled to see the G20 taking the issue of illicit financial flows seriously,” said Raymond Baker, director of Global Financial Integrity.  “Secrecy jurisdictions provide a safe haven for the ill gotten gains of kleptocrats, criminals and tax evaders.  They destabilize the world economy, bankrupt developed and developing countries alike, and facilitate the financing of trafficking and terrorism.”

“Today’s declaration—and its Development Working Group appendix—significantly advance the discussion around these issues,” continued Baker. “Moving forward, however, the pressure on secrecy jurisdictions needs to increase, and a standard of automatic exchange of tax information between jurisdictions should be adopted.”

“We were disappointed G20 leaders didn’t heed the advice of Indian Prime Minister Manmohan Singh, who advocated in favor of automatic exchange of tax information during the summit,” added Baker. While the final declaration mentioned automatic exchange of tax information as a potentially useful tool in tackling non cooperative jurisdictions, it stopped short of calling for its implementation—instead stating that they would “consider” it “on a voluntary basis as appropriate and as provided for in the” Multilateral Convention on Mutual Administrative Assistance in Tax Matters.

Additionally, GFI was heartened by the G20’s comments on the abuse of corporate vehicles. In the final declaration, the G20 states that they “call on FATF and OECD to do further work to prevent misuse of corporate vehicles.”  The statement comes in the wake of a recent report from the Stolen Asset Recovery Initiative (StAR Initiative)—a partnership between the World Bank and the UN Office on Drugs and Crime (UNODC)—which documented how corporate vehicles are currently being abused by kleptocrats and called on world leaders to require the disclosure of the names of the beneficial owners of corporations, trusts and foundations upon formation.

“Criminals, tax evaders, and kleptocrats from around the world are taking advantage of corporate secrecy structures in the U.S. and elsewhere to hide and launder illicit money,” said Heather Lowe, GFI legal counsel & director of government affairs. “This financial opacity puts law enforcement at a major disadvantage. Too often cases are dropped, or investigations are closed, due to a lack of evidence connecting the illicit funds held in accounts owned by anonymous corporations to the criminal owners of those companies.”

“I am heartened that the G20 recognizes this as a major problem, and I look forward to working with FATF and OECD on this issue moving forward,” continued Lowe, who is currently collaborating with FATF on the review of its 40+9 recommendations.

For more information and to schedule interviews with Mr. Baker or Ms. Lowe, contact Clark Gascoigne at cgascoigne@nullgfintegrity.org or +1 202 293 0740 ext 222.

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Notes to Editors:

  1. Click here to download the G20 leaders’ communique, the declaration, and related appendices.
  2. Click here to download the StAR Initiative report, The Puppet Masters: How the Corrupt Use Legal Structures to Hide Stolen Assets and What to Do About It.

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Global Financial Integrity (GFI) is a Washington, DC-based research and advocacy organization which promotes transparency in the international financial system.

For additional information please visit www.gfip.org.

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