Global Financial Integrity

 

Global Safeguards, Transparency, Key to Stemming Systemic Illicit Financial Flows

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Monique Perry Danziger, +1 202 293 0740 ext. 222

Liechtenstein Scandal Points to Need for Improved Global Safeguards to Stem Illicit Financial Flows, Says Global Financial Integrity

WASHINGTON, DC – Global Financial Integrity (GFI) urges the Organization for Economic Cooperation and Development (OECD) and the Financial Action Task Force (FATF) to implement new safeguards that will greatly improve transparency and cooperation in the global financial system.  New policies to further restrict terrorist groups from transferring and hiding funds, to create a level playing field for all taxpayers and to curtail the flow of all forms of illicit capital are critical to the future integrity of the financial system.

The tax evasion investigation by the German government has grown over the last week to include scrutiny from many governments including the U.K., U.S., Australia, Canada, France and Sweden. But while global tax evasion is estimated to be in the hundreds of billions of dollars annually, it is the secret nature of bank accounts in Liechtenstein, and other secrecy jurisdictions, that should be a key focus of the investigations and of new safety measures.

“We are seeing something truly historic happening,” says GFI Director, Raymond Baker.  “Tax evasion, while significant in terms of negative impact on economies and scale of practice, is only a part of a larger and systemic financial problem.”

Estimates of illicit financial flows, which include the proceeds of criminal activity, government corruption, and commercial malfeasance, are between $1 trillion and $1.6 trillion dollars annually.

“Globalization allows money to move across borders with increasing ease, while international law remains unchanged,” said Baker.  “We must institute new, comprehensive finance laws if we are to have any impact on this growing problem.”

To address this flow of illicit capital GFI recommends the following actions:

  • Standardization of anti-money laundering laws of all OECD member states to the most restrictive level to create a seamless legal barrier impeding the laundering of money for illegal activities (including tax evasion) that occur outside the border of member states.
  • Implementation of new FATF rules which require full transparency of the beneficial ownership and management of all corporations, foundations, and trust accounts to improve monitoring of illegal financial activity, including money-laundering and tax evasion.
  • Issuance of a formal statement from G-8 countries during the Hokkaido Summit in July 2008 calling on the OECD and FATF to implement anti-money laundering and transparency measures and emphasizing the necessity of these measures in combating illegal financial activities in all forms.