FTC Conference 2013 Preview: Why We're Here
September 29th, 2013
September 29th, 2013
Towards Transparency: Making the Global Financial System Work for Development, the Financial Transparency Coalition 2013 Conference, will take place in Dar es Salaam on October 1-2. To join in the discussion, or ask questions of the panel, Tweet us using the #FTCDar2013 hashtag, or follow FTC on Twitter at @FinTrCo.
Illicit financial flows are one of the leading, and most under-appreciated, causes of poverty in the developing world. They erode taxes bases, facilitate crime and corruption, and represent a massive transfer of wealth from poor to rich. Financial Transparency Coalition member Global Financial Integrity finds that developing countries lost US$859 billion to illicit flows—defined as cross-border movements of funds that are illegally earned, transferred, or utilized—in 2010 alone. And the estimates are conservative, since they fail to include important sources of illegal money, including cash movements, mispriced services, hawala networks and most transfer mispricing.
This creates a tremendous drain on the developing world’s resources, outpacing aid coming in by 8 to 1. When this is taken into account, the conventional wisdom by many in the West of global development changes. A study GFI conducted with the African Development Bank found that when you take into account the illicit financial flows, as well as flows of foreign direct investment, aid, remittances, debt relief, imports and exports, and all other private sector flows into and out of Africa, the country is a net creditor to the rest of the world. US$1.4 trillion left the continent on net from 1980-2009. Developed countries may think they are being generous to Africa, but in reality they are taking far more than they are giving.
Even absent the other harms caused by illicit financial flows, like the erosion of tax bases and public trust, this capital loss is one of the primary explanations for why much of Africa is struggling to develop. It is also one of the biggest drivers of global inequality.
Where does the money go? It is roughly split between offshore financial centers, like the Cayman Islands and Switzerland, and developed countries, like the United States and United Kingdom. It’s moved to these locations using the global shadow financial system—a worldwide network of secrecy jurisdictions, anonymous shell corporations, partnerships, and trusts, and banks and other institutions with permissive money laundering standards.
Deep down, this is a moral issue. Developed countries cannot continue to claim they are committed to aiding Africa while simultaneously taking vast sums of ill-gotten gains away from the continent. It is wrong and has gone on long enough.
That’s why we’re excited to join forces with civil society and government partners from around the globe this week to work towards a solution. If you haven’t been able to join us here in Dar es Salaam, fear not. You can join the discussion this week by following the FTC on Twitter at @FinTrCo and using the #FTCDar2013 hashtag.
🚨@FinTrCo & 36 global civil society orgs call for US to tackle its black hole of financial secrecy undermining demo… https://t.co/c9YXSj1fUm
- Wednesday Mar 29 - 2:32pm