Financial Transparency Coalition

PRESS RELEASE
FOR IMMEDIATE RELEASE

As the UK Anti-Corruption Summit closes, it’s vital that countries rapidly implement commitments made

As a group of world leaders lend their names to the Anti-Corruption Summit in London, it’s important that we see action from all nations to put an end to tax abuse, corruption, and other illicit flows. The Panama Papers further confirmed that financial secrecy is potent tool, and it’s helping to fuel illicit flows around the globe.

“The Panama Papers left virtually no country unscathed,” said Porter McConnell, Director of the Financial Transparency Coalition “The data showed that a shadow financial system is available to the rich and powerful worldwide, and individuals from rich and poor countries alike turned up in the documents. The leaks revealed that Mossack Fonseca used the British Virgin Islands, a UK overseas territory, more than any other jurisdiction, when setting up shell companies.”

The London summit, which brought together leaders of 42 countries, aimed to discuss measures to curb corruption, and to galvanize global action on the issue. The summit Communiqué included some transparency commitments from governments in attendance.

The summit Communiqué included new commitments on beneficial ownership information, as a number of countries pledged to create publicly available registers of ownership information, including Nigeria, Kenya, and France. These registers, which must be freely accessible to the public in open data formats in order to be effective, would disclose the real person or people ultimately in control or benefitting from a company.

“More governments are waking up to calls from their citizens, who are no longer willing to put up with the inequality made possible by financial secrecy,” said Koen Roovers, Lead EU Advocate for the FTC. “Public registers of the true owners of companies would help detect and deter corruption and tax abuse and restore trust in the global financial system.”

A number of countries also supported public country-by-country reporting for multinational corporations, which would help identify where companies are paying taxes, and if they’re paying their fair share.

“Twelve governments, more than half of them OECD members, expressed support for the development of a global standard of public country-by-country reporting for multinationals,” said Pooja Rangaprasad, Policy Coordinator for the FTC. “Perhaps the time has come for the OECD to take a second look at its own standard for corporate reporting, which keeps this information out of the hands of citizens.”

“When talking about corrupt politicians stealing assets from their country, it’s important to note that the crime doesn’t take place in a vacuum,” added McConnell. “Jurisdictions that are all too willing to accept dirty money, due to lax disclosure laws or high levels of secrecy, are simply on the receiving end of a corrupt bargain. And it’s facilitated by lawyers and accountants, who are the gatekeepers of coveted financial centers, yet there are few independent controls to make sure that they aren’t dealing with dirty money.”

As the Panama Papers showed, highlighting the role of enablers is key to tackling corruption and tax abuse. Mossack Fonseca, the Panamanian law firm at the center of the leaks, often failed to perform necessary checks, or offered services to clients despite questions raised about their backgrounds. And a recent undercover investigation by Global Witness, an FTC member, showed how willing a number of New York City-based lawyers were to offer advice on how to move potentially illicit cash into the United States.

“These were promising commitments from countries attending the summit,” added Rangaprasad. “But to fix the problem, and not just create a market for the rest of the world to pick up the business, there needs to be a permanent intergovernmental space to set these standards that’s inclusive of all countries.”

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Notes to Editors:

[1] The UK Anti-Corruption Summit was held 12 May in London and brought together 42 governments to discuss measures and make committments to tackle corruption and illicit flows. Final Communique available here.
[2] Earlier this year, Global Witness released an investigation into enablers of dirty cash, finding that a number of lawyers based in New York were willing to discuss how to move money into the U.S.
[3] Public registers of beneficial ownership information would help detect and deter tax abuse, corruption, and other illicit flows. Read more on beneficial ownership here.

Contact:

Christian Freymeyer, Financial Transparency Coalition
+1.410.490.6850
cfreymeyer@financialtransparency.org