Leaders of the Group of Seven (G7) industrialised nations leaders have reiterated their backing for curtailing illicit financial flows stemming from crime, corruption, and tax evasion.At the end of their meeting last week in Brussels, they said in a communique: We will continue to work to tackle tax evasion and illicit flows of finance, including by supporting developing countries to strengthen their tax base and help create stable and sustainable states.
The communique went on to say that the G7 countries commit to work with all partners to agree an ambitious and universal post-2015 agenda, anchored in a single set of clear and measurable goals.
The leaders said that thepost-2015 development agenda should be centred on people and focused on balancing the environmental, economic and social dimensions of sustainable development.
According to the Washington,DC-based Global Financial Integrity (GFI), illicit financial flows drain roughly $1 trillion a year from developing countries stifling economic growth and fuelling crime, corruption, and tax evasion.
The GFI is calling on world leaders to push for an explicit illicit financial flows commitment in thepost-2015 Sustainable Development Goals (SDGs), which are to follow the Millennium Development Goals (MDGs).
Heather Lowe, GFIs legal counsel and director of government affairs, said: While this is not aground-breaking communique, this statement demonstrates that the G7 is willing to put in the sustained effort necessary to tackle illicit financial flows.
At the G8 summit in Lough Ernein Northern Ireland (when Russia was present) last year, the leaders made their initial commitment to tackling illicit financial flows.
Ms Lowe said that the leaders got the ball rolling on this issue then. While we appreciate the continued momentum, we need them to ensure that the effort truly engages and encompasses developing countries. We continue to have significant concerns that developing countries are being excluded from these critical developments, she said.
Ms Lowe sent on: Illicit financial flows are the single biggest impediment to sustainable economic development in poor countries. As G7 leaders are clearly committed to curtailing illicit financial flows as well as to truly sustainable development commitments, it only makes sense that they push to make the curtailment of illicit flows a stand-alone commitment within the forthcoming UN Sustainable Development Goals.
The GFI says that illicit financial flows are facilitated by opacity in the global financial system, with anonymous shell companies being a favoured tool of money launderers.
The G7 leaders reiterated their Lough Erne commitment to addressing the abuse of anonymous companies and trusts today, saying: We remain committed to prevent the misuse of companies and other legal arrangements such as trusts to hide financial flows stemming from corruption, tax evasion, money laundering, and other crimes, ensuring that beneficial ownership information is available in a timely fashion to financial intelligence units, tax collection and law enforcement agencies, for example through central registries or other appropriate mechanisms, leading by example in implementing the Financial Action Task Force and other relevant international standards and our national action plans in line with the principles we agreed at Lough Erne.
However, the GFI expressed concern that certain G7 members may be falling short of their Lough Erne National Action Plans on beneficial ownership.
Anonymous shell companies are the number one tool for laundering the proceeds of crime, corruption, and tax evasion, noted Ms. Lowe. Creating central registries of the true, human, beneficial owners of each company available to law enforcement, if not to the public is a common sense approach to curbing financial crime and the tremendous flow of illegal money worldwide.
While certain G7 members notably the United Kingdom are clearly making progress in implementing their national action plans on beneficial ownership, we are concerned that the solutions currently being debated within the G20 [Group of 20 emerging economies] and OECD [Organisation for Economic Co-operation and Development] initiatives relate solely to identifying beneficial ownership information of companies for tax purposes, Ms Lowe said.
The use of anonymous companies to facilitate illicit finance is much bigger than just tax evasion.We therefore call on all G7 members to publish assessments on how they are complying with their National Action Plans by the end of 2014, she added.
Source: GNA
