WASHINGTON D.C. – Global Financial Integrity (GFI), a Washington-based research and advocacy organization, praised the commitments made to address illicit financial flows by leaders in government and business at the United Nations Conference on Sustainable Development, also known as the Rio+20, Conference this week.
This is the first time that the United Nations’ sustainable development agenda has acknowledged the importance of addressing illicit financial flows, which GFI estimates cost the developing world US$1 trillion per year.
The final document stresses that, “fighting corruption and illicit financial flows at both the national and international level is a priority.”
Raymond Baker, director of GFI, reacted to the document, saying, “Our research shows for every one dollar in foreign aid money that flows into developing countries, about ten dollars flows out illicitly. This dynamic is the exact opposite of sustainable. Curtailing these outflows should be a cornerstone of any sustainable development agenda.”
Extractive Industries Transparency
Global Financial Integrity applauded the Rio+20 leaders for calling upon governments and businesses to implement accountability and transparency measures in the extractive industries in order to “prevent illicit financial flows from mining activities.”
Baker pointed to the Securities and Exchange Commission (SEC), who still have not yet implemented final rules for Section 1504— a key extractive industries transparency provision— of the Dodd-Frank financial reform law passed over two years ago.
“The SEC could fulfill a major Rio+20 commitment and advance extractive industries transparency and sustainable development forward considerably by issuing strong rules for Dodd-Frank Section 1504 as soon as possible. They have already missed their deadline by over a year,” Baker said. “Developing countries need natural resource wealth to wind up in the pockets of their citizens, not in the Swiss bank accounts of corrupt officials.”
Global Financial Integrity was pleased to see the final Rio+20 document note that corporate structures without declared beneficial owners are an impediment to detecting and eliminating criminal activity, and calls on all nations involved to increase incorporation transparency.
GFI noted that the communiqué released in Los Cabos earlier this week by the G20 did not recognize the importance of beneficial ownership to fighting crime.
Baker added, “Terrorists, poachers, traffickers, and many other kinds of organized criminals use anonymous shell companies to hide their money. Beneficial ownership laws can cut these groups off at the top, by preventing the easy flow of illicit money to leaders and kingpins.”
Baker noted that the document was only the beginning of the process to ensure sustainable development, “These commitments are encouraging, but ultimately meaningless unless business and government leaders follow them up with substantive action.”
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Notes for Editors:
Global Financial Integrity (GFI) is a Washington, DC-based research and advocacy organization which promotes transparency in the international financial system.
For additional information please visit www.gfintegrity.org.