Financial Transparency Coalition

Mountaintops provide a convenient symbol for anything from achievement to power.  So it doesn’t come as a surprise that the meeting of the world’s twenty most powerful leaders is called the G20 “summit.”  Actually, the copycat nomenclature runs far deeper.  For instance: the diplomats who lay the groundwork for the G20 leaders’ trip to the summit? They’re dubbed “Sherpa,” with a dash of self-aware irony, after the Nepalese guides who help mountaineers scale peaks inNepal.  And with what may be a move to thrash the symbol to death, the G20 Sherpa’s aides are called “yaks.”

It was just over two years ago that the G20 started seriously talking about illicit financial flows. It was then that a leaked letter from Michael Froman, the U.S. Sherpa, ahead of the G20 Summit in 2009, read: “As we take these steps to increase the flow of capital to developing countries, we also need to prevent its illicit outflow. We should work with the World Bank and others to stem these flows and to secure the return of stolen assets to developing countries.”

At the time, I expressed optimism, but noted that the declaration was only a midway point; the real work was still ahead. I wrote: “G20 summits, much like their namesakes, are often self-admiring [and] short lived…the summit is the halfway point. The descent is often equally, if not more, dangerous than the ascent. After all, once a group of climbers has committed to a project (and by my count there is nothing more committing than climbing a mountain or signing a declaration issued by the world’s most powerful), they have to follow through.”

And, as expected, that follow through is still dragging on.

This month the Task Force held its annual two-day conference in Paris. From the conference, the Task Force released a Message to the G20 on the concrete steps to stem illicit financial flows and increase transparency in the global financial system. In this message, the Task Force further outlined five recommendations into a working plan for the G20, which included: beneficial ownership disclosure,  automatic tax information exchange,  trade mispricing curtailment, country-by-country reporting by multinational corporations, and  better anti-money-laundering laws. The recommendations recognized specific obstacles and the difficulty of logistics of implementation.

On Thursday, the G20 will hold a summit in Cannes, France. It will be the G20’s sixth meeting in a series of ongoing discussions about the world’s financial markets. And although the leaders have committed to taking steps to reducing illicit financial flows, if the recently released communiqué from the G20 Finance Ministers’ meeting tells us anything, it is that those steps have been tenuous. As Raymond Baker, director of Global Financial Integrity has put it:

The Finance Minister’s communiqué fails to mention country-by-country reporting, automatic exchange of tax information, disclosure of beneficial ownership, or strengthening of anti-money-laundering laws. These measures are key to creating global economic development, and financial stability. What we have here are piecemeal fixes to a systemic problem. The G20 member countries must support comprehensive measures that would increase overall transparency and accountability across the board for multi-national corporations and financial institutions, in developed and developing countries alike.

If the G20 is really serious about its promises, it will take definitive and concrete steps toward solving these problems. It will listen to the voices of roughly 40,000 people who have signed the global petition asking it ends tax haven secrecy in Cannes. And it will adopt the comprehensive approach outlined by the Task Force to bring transparency to the global financial system.