Learn About Illicit Financial Flows
Key Terms

Latest

Feb
24

CNBC’s New Documentary ‘Filthy Rich’

EJ Fagan

CNBC aired its new documentary, “Filthy Rich“, for the first time last night. The documentary was the product of a year-long investigation, and featured Task Force Coordinating Committee members Global Witness and Transparency International and Task Force Allied Organization SHERPA. The hour-long special focused on the massive wealth accumulated by kleptocrats like the Obiang ruling family of Equatorial Guinea and the Aliyev ruling family of Azerbaijan and how the United States enables their corruption. Video clip below:

I highly recommend watching the whole documentary. It will re-air this Sunday night at 10 pm EST on CNBC. The Task Force will stay on top of any airings, and send out reminders via Twitter and Facebook whenever the documentary will be on. Sign up to follow-up for further updates.

Continue Reading »

Feb
24

Swiss ‘clean money’ strategy is lipstick on a pig

Nicholas Shaxson

flickr / sirhenryb

Reuters has reported:

“Under a ‘clean money’ strategy, which Finance Minister Eveline Widmer-Schlumpf is expected to present to the cabinet on Wednesday, banks will be obliged to get foreign clients to declare they are compliant with their home tax regimes.”

(See a new publication on the Swiss financial centre strategy. So far, only the release is available in English.)

Let’s be clear about what this is likely to mean in practice.

Some clients of Swiss banks have money parked there legitimately, with all relevant assets and income declared to their home authorities as appropriate. But lots of them have stashed their cash there to evade tax (and to do other nefarious things). So as regards the ‘clean money’ strategy, the relevant people are those who have already taken the formidable step of lying to their home tax authorities. This measure merely gets them to lie again – but this time, only to Swiss banks. Lying this time will be far easier: the Swiss banks, unlike their home tax authorities, have no incentive to police these ‘declarations’, and there will be no penalties (apart from being subjected to potentially irritating nudging and winking from the bankers).

This measure could perhaps make a very small difference, at the margins, but won’t put the Swiss banks out of pocket much. By contrast, it hands the banks a major coup: business as usual, covered by a charade that allows them to say ‘look how clean we are!’

Continue Reading »

Feb
23

Ways to Meet President Obama’s Corporate Tax Goals

Ann Hollingshead

In The President’s Framework for Business Tax Reform, which the White House released earlier this week, President Obama advocates lowering the U.S. corporate tax rate to 28 percent. This move is not surprising. Last month, President Obama brought up a basic minimum corporate tax in his State of the Union address.

But the tax cut is not alone. Alongside this cut, Obama advocates cutting corporate tax loopholes. This element is not to be overlooked. There are far too many corporate tax loopholes—which are deductions, credits, and other tax expenditures that benefit certain activities—and they often result in very different marginal tax rates for companies in different industries. They even sometimes result in for different companies in the same industry. It is these loopholes which allow corporations to pay an average rate of 12%, even though the statutory rate is 35%. It is these loopholes that allowed the 100 largest U.S. multinational corporations to pay about $16 billion of U.S. tax on approximately $700 billion of foreign active earnings in 2004 – an effective tax rate of about 2.3%. We must close these loopholes to align the effective corporate tax rate with the official rate.

In fact Senators Carl Levin and Kent Conrad have already introduced a bill, to accomplish just what this. The bill, called Cut Unjustified Tax Loopholes Act or CUT Loopholes, would slice loopholes and, according to the Joint Committee on Taxation and the Office of Management and Budget, would reduce the deficit by at least $155 billion over the next decade.

Continue Reading »

Feb
23

Letter to the Editor in FT: Country-by-Country Reporting Can Help the Poor

EJ Fagan

Karen Egger of The Task Force’s Transparency International wrote the following to The Financial Times in a letter to the editor:

Sir, The position expressed by the large oil companies (“Shell joins push to dilute EU’s proposed anti-corruption rules”, February 20) that disclosing information on a country-by-country basis of their operations will not “help combat corruption” is counter-intuitive at best and misrepresentative at worst. Citizens, investors and civil society, especially those in developing countries, must have relevant information in order to determine the full extent of the activities of these companies. Multinational businesses generate revenues and profits in resource-rich countries and so should contribute to the public coffers through royalties, taxation and the like. In the absence of country-by-country reporting by companies or disclosure of this information by countries, it is impossible to know how much profit is generated and what, if any, special arrangements governments may have entered into.

Full letter available here. She goes on to both underline the importance of transparency for developing countries and repeat the business case made by investors for country-by-country reporting in regards to good financial decision-making.

Continue Reading »

Feb
23

Audio: Taxcast February Edition by Tax Justice Network

Tax Justice Network

In TJN’s February edition of Taxcast, rounding up tax justice news for February: Are City of London Police really serious about prosecuting financial crimes? Are bankers paying fair taxes on their bonuses? And how Facebook is saving billions in tax via Ireland and Bermuda. Audio below:

What’s the Taxcast?

Taxcast is an entertaining and informative 15 minute monthly podcast with the latest news, research and analysis of events in tax evasion, tax avoidance and the shadow banking system.

Continue Reading »

Feb
23

Tax Abuse Campaigners are the Strongest Pro-Business Campaigners There Are

Richard Murphy

It’s good to see the Guardian report this morning that:

The former boss of Greggs, who built the bakery business into one of the UK’s most successful high street chains, has become the first senior executive to break ranks with his peers and attack the level of boardroom pay in corporate Britain.

Sir Mike Darrington, who led Greggs for 25 years before his retirement in 2008, said: “The quantum of executive pay is excessive and must be reduced … if the current packages were halved, senior executives and bankers would still be overpaid.”

In particular Darrington, 69, is keen to scotch the myth that attacks on executive rewards are attacks on business. “It is a smokescreen and a lot of bollocks – it is the greed of the people [at the top] that is anti-business.” He has labelled his campaign “pro-business and anti-greed”.

Precisely so. That “pro-business and anti-greed” line is right.

Just as it’s right to say that demanding that all companies meet the regulatory demands imposed upon them is “pro-business and anti-free-riding”.

And demanding that HMRC chase the 700,000 companies a year who do not submit corporation tax returns is “pro-honest business and anti-fraud”.

Continue Reading »

Feb
22

Wednesday’s Daily News Digest

EJ Fagan

Coming Home to Corruption
100 Reporters, February 22, 2012

‘Pervasive’ Corruption, ‘Resilient’ Taliban Complicate Afghan War: Intel officials paint bleak Afghanistan picture
U.S. News and World Report, February 21, 2012

Afghanistan Targets Flight of Cash
The Wall Street Journal, February 22, 2012

Third Ministerial of the Paris Pact Initiative
U.S. State Department (Remarks), February 16, 2012

Justice Withdraws Foreign Bribery Charges
The Wall Street Journal (blog), February 22, 2012

Continue Reading »

Feb
22

Op-Ed: Banks, Not Borders, Hold Immigration Key

EJ Fagan

Krishen Mehta, co-chair of Global Financial Integrity, wrote an Op-Ed in the Dallas Morning News earlier this week. He addressed how illicit financial flows are a root structural cause of illegal immigration from Mexico to the United States, and how Mexico and the U.S. can work to solve it. The Op-Ed reads:

Solutions to root causes of the huge levels of illegal immigration from Mexico to the United States deserve more attention. One cause of people leaving developing countries like Mexico is the outflow of financial resources from illicit activities. Stop this flow of capital, and countries would have the resources to create jobs and opportunity at home and stem the flow of people over our borders.

Tto do this, we must change our laws, which today make it far too easy for people from other countries to hide their ill-gotten gains here in America.

A report just released by Global Financial Integrity, a think tank based in Washington, estimated that Mexico lost a massive $872 billion in illicit financial outflows from 1970 to 2010. The report also found that banks in the United States were the top destination for Mexican funds. In this way, our own banks are helping push ordinary Mexicans to come to the United States, often illegally, to overcome the domestic problems created by this kind of massive capital outflow.

Read the rest of the Op-Ed at the Dallas Morning news.

Continue Reading »

Feb
22

EU on the cusp of extractive transparency reforms

Carl Dolan

Robert Galloway / Transparency International

Cross-posted with permission from Transparency International

newly discovered diamond field in Cameroon might contain as many as 250 million carats – 2.5 times the total world output of diamonds in 2007. The nearby village of Mparo, meanwhile, lacks running water, asphalt roads or telephones. Its mud-brick schools lack benches or books, No electricity flows through its power lines. An electrification project started last year lies dormant amid accusations of stolen funds.

The villagers have been promised 10 per cent of the taxes mine production, which should be enough to change their lives. But exactly what those proceeds will be is unclear as the South Korean company that won the mining contract does not have to disclose any information about its operations in Cameroon. Worse, the company is mired in corruption allegations amid claims that the reserve figures for the mine were artificially inflated to manipulate the share price,

If multinational companies were required to disclose the details of their payments to governments around the world, the citizens of Mparo would know just how much of this they are entitled to. When EU ministers meet today, they have the chance to do just that, shaping legislation that could transform the oil, gas, mining and forestry industries, as well as the lives of millions around the globe. Some extractive companies, however, do not want to disclose details of individual projects like a single diamond mine.

Continue Reading »

Feb
22

Black Gold, Texas Tea: Uganda’s Crash Course with the Resource Curse

Ann Hollingshead

Compared to some of the countries in the neighborhood, Uganda is doing pretty well. Directly to the West lies the Democratic Republic of the Congo, ranked by Foreign Policy as the world’s fourth most failed state. With a per capita GDP of $189, it is one of the poorest nations in the world. In the last ten years, it has fallen into near chaos, with many areas lacking law, order, electricity, and medicine. Directly to the North of Uganda lies South Sudan, the world’s newest nation, which despite outward promises remains in a fearsome political deadlock with its northern counterpart. Its first year of nationhood has been marked by brinksmanship over the billions of gallons of oils that lie in the south, but must be piped through the north to reach international markets. Also nearby are the Central African Republic, one of the least-developed countries in the world, and Somalia, the world’s practical synonym for failed state.

Uganda, in comparison, looks pretty good. In 2011, Uganda held its fourth presidential and parliamentary elections in 20 years, although none included a peaceful transfer of power. Its economy is also doing comparatively well—government policies have encouraged a consistent pace of growth, including 7.2% in 2009 and 5.2% in 2010, very respectable numbers given that much of the rest of the world was still in recession in those years. Much of this growth is driven by the service, manufacturing, and agriculture sectors—the latter of which contributes to 80% of the country’s employment.

Like I said, pretty good.

Continue Reading »

Feb
17

Part II: The Full Economic Costs And Benefits Of Transparency In Extractive Industries

Ann Hollingshead

This post is the second part of a two-post series. The first post, on the economic costs of Section 1504, is available here.

Embedded into the Dodd-Frank Wall Street Reform and Consumer Protection Act–also known as the “financial overhaul bill”—was Section 1504, which will require companies listed on the U.S. stock exchange to disclose payments to governments for oil, gas, and mining. The American Petroleum Industry (API), a U.S. trade association for the oil and gas industry, is pushing back against this provision. In a letter to the SEC, API claims Section 1504 defies Executive Order 13563, which Obama signed in 2011, to require federal agencies to “engage in a cost-benefit analysis…of proposed and existing regulations.” API argues the SEC has failed to conduct that compulsory cost-benefit analysis. They’re even threatening to sue.

This post establishes a theoretical framework for that cost-benefit analysis. In my first post, I addressed the costs of Section 1504. Below are the benefits.

Benefits of Section 1504

Economic and political benefit to impoverished residents of foreign countries.[1] At its core, the intent of Section 1504 of the Dodd-Frank Act is to reverse the “resource curse” in developing countries. The resource curse is the tragic phenomenon that countries well-endowed with natural resources tend to have slower economic growth than their counterparts without. This theory has been demonstrated in strong quantitative terms. According to an analysis of developing countries by Jeffrey Sachs and Andrew Warner, the more an economy relies on mineral wealth, the lower its growth rate. Countries with significant natural resource endowments also tend to have an increased likelihood of experiencing war and violence and a decreased likelihood of having a democratic system of governance.[2]

Continue Reading »

Feb
16

Tax evasion gets just that little bit harder

Richard Murphy

Crossposted with permission from Tax Research UK.

The Task Force on Financial Integrity and Economic Development, of which Tax Research UK is a member, has welcomed new moves to tackle tax dodging announced by the global body charged with fighting financial crime.

Under revised standards from the Financial Action Task Force (FATF), tax evasion will be an offence that can lead to a money laundering charge in the future. That means that, as I have long argued should be the case,  banks will now be obliged to be on the look out for suspected tax evasion by their clients and report it if they suspect it is happening. The new FATF recommendation will provide authorities with a powerful tool to help prosecute individuals and corporations attempting to dodge financial obligations, hide ill-gotten gains or fund illegal activities.

Continue Reading »

Pg 50 of 179 First...1020...49505152...6070...Last
Latest Press Releases

New Standard Chartered Settlement Underscores Insufficiency of Fines & Monitoring in Deterring Illicit Activity at International Banks

Global Financial Integrity · August 20, 2014

WASHINGTON, DC – As New York regulators announced that British bank Standard Chartered ...

GFI Welcomes New U.S.-Africa Partnership to Combat Illicit Finance

Global Financial Integrity · August 7, 2014

WASHINGTON, DC – Global Financial Integrity (GFI) welcomed the announcement from the White House and African leaders today regarding the establishment of a ...

GFI Urges Obama, African Leaders to Prioritize Curbing Illicit Financial Flows at U.S.-Africa Summit

Christian Freymeyer · August 5, 2014

WASHINGTON, DC – As African leaders descend on Washington this week for the historic U.S.-Africa Leaders Summit, Global Financial Integrity (GFI) called ...