November 14, 2008
Monique Perry Danziger, +1 202 293 0740 ext. 222
WASHINGTON, DC – When G20 leaders meet in Washington, D.C., this Saturday, improving transparency in the financial system must be a priority, says Global Financial Integrity (GFI).
“While the current economic crisis has many causes, boosting transparency will go a long way in addressing the problem,” said GFI director Raymond Baker.” We must do away with the opacity and secrecy in the international financial system which has enabled irresponsible and criminal financial practices to run rampant while frustrating attempts to regulate international business and manage national finances.”
In advance of Saturday’s meeting, which will launch a concerted effort to tackle the underlying causes of the recent economic downturn and establish new protocols for operating in the global economy, GFI makes the following recommendations for improving transparency:
- Require country-by-country reporting of subsidiaries, sales and profits by multinational corporations, a move underway for some types of entities operating in the European Union.
- Require that beneficial ownership of all corporations, trusts and foundations be recorded in publicly available records, a step already recommended by the Financial Action Task Force.
- Automatic exchange of information with tax authorities in other countries on interest and dividends received by non-resident individuals, corporations, and trusts. The E.U. already requires this in a more limited scope as part of its Savings Tax Directive.
- Require two signatures on international commercial invoices—the exporter’s and the importer’s—attesting that there is no abusive transfer pricing for the purpose of manipulating taxes and profits. A similar requirement is in place under the Kimberly Process.
“Opacity undermines accountability,” said Raymond Baker. “Wealthy citizens, businesses, criminals and even terrorists are utilizing offshore financial centers and secrecy jurisdictions to hide their wealth while feeding a system which facilitates the flow of hundreds of billions of dollars out of poor countries each year. Plugging these holes and curtailing the monetary drain on nations is a fundamental step toward correcting the current economic crisis.”