Stronger laws and institutions are needed to prevent corruption and money laundering while bankers, lawyers and accountants who enable financial crime must face punitive sanctions says a UN panel.
The High-Level Panel on International Financial Accountability, Transparency and Integrity for Achieving the 2030 Agenda (FACTI) is calling on governments to agree to a Global Pact for Financial Integrity for Sustainable Development.
In its report, Financial Integrity for Sustainable Development, the FACTI panel says that if such a pact were to become effective, governments around the world would be able to recover income streams currently lost to money laundering and tax abuse to finance critical action on extreme poverty, the coronavirus pandemic and the climate crisis.
The panel of former world leaders and central bank governors, business and civil society heads and academics says as much as 2.7 per cent of global GDP is laundered annually, while corporations shopping around for tax-free jurisdictions cost governments up to US$600 billion a year.
The report calls for greater transparency around company ownership and public spending, stronger international cooperation to prosecute bribery, international minimum corporate tax and the taxing of digital giants, and global governance of tax abuse and money-laundering.
Wrongdoing by bankers
The panel is also contemplating tougher sanctions on banks that play a role facilitating illicit financial flows. “Closing loopholes that allow money laundering, corruption and tax abuse and stopping wrongdoing by bankers, accountants and lawyers are steps in transforming the global economy for the universal good,” says Ibrahim Mayaki, FACTI co-chair and former prime minister of Niger.
At a time when billionaires’ wealth soared by 27.5 per cent while 131 million people were pushed into poverty due to the coronavirus pandemic, the report says that a tenth of the world’s wealth could be hidden in offshore financial assets, preventing governments from collecting their fair share of taxes.
Recovering the annual loss to tax avoidance and evasion in Bangladesh for example would allow the country to expand its social safety net to 9 million more elderly, in Chad it could pay for 38,000 classrooms, and in Germany it could build 8,000 wind turbines.
The report, Financial Integrity for Sustainable Development, can be found here.
Categories: Trade Based Financial crimes News