Learn About Illicit Financial Flows
Key Terms



House Hearing on Non-Resident Alien Deposits Regulation

EJ Fagan

flickr / slangvei

Today, the House Subcommittee on Financial Institutions and Consumer Credit held a hearing on a proposed IRS regulation which would allow the IRS to track the deposits of non-resident aliens in the United States. The United States functions as a tax haven for many non-resident aliens, as the IRS is unable to determine how much money is hidden in US banks. The IRS is seeking the regulation as part of a global effort to increase tax information exchange, and eventually collect revenue from more US tax evaders. Video is available here.

Here’s how it all works. The IRS collects information on all interest payments paid by banks to depositors from residents in the United States, and uses this information to tax the depositors. However, the United States does not tax non-resident aliens, so that information is not collected. These non-resident aliens have about $4 trillion in deposits. The IRS would collect that information, and share it with countries which have tax information exchange agreements with the United States. We already do this for Canadian citizens, but not others.

Continue Reading »


EU corporate tax base harmonisation proposal may actually increase tax competition

Alex Marriage

The EU could adopt a Common Consolidated Corporate Tax Base by early next year. Regrettably, participation will be optional for both member states and companies and no minimum tax rate will be applied, leaving the door open to increased tax competition.

The Commission’s proposal is commendable for introducing a form of formularly apportionment which seeks to establish where real economic activity takes place by looking at staffing levels, sales, assets, etc. meaning that companies cannot simply cherry pick the location where rates are lowest. This would be a crucial step forward in the fight against transfer pricing abuse by companies that use subsidiaries in low tax jurisdictions in order to minimise their tax bills. Secondly this is a move towards increased tax cooperation.

However, as Walter Defraa of DG Tax stated in a recent meeting the reform could lead to more tax competition as it would be easier to assess effective rates. But another reason for this is that the commission’s proposal will be a voluntary initiative only. Ludo Vekemans of the European Trade Union Confederation rightly argued that in order to avoid this enhanced competition there should be a common or at least minimum tax rate as well, adding that the CCCBT should be made compulsory.

Continue Reading »


Swiss-UK tax deal: good news coverage, lame responses

Markus Meinzer

We have had good press coverage for yesterday’s UK-Swiss tax deal analysis, which reveals how the UK government’s claims that it will net 4-7 billion pounds in tax revenues are fatally flawed. See, for example:

We are told that we also got a good discussion on the BBC’s flagship Today programme yesterday.

Of course (of course!) we have had some predictably lame responses to it. The first thing we note is that nobody so far has picked any holes in it, technically speaking. It is early days, of course, and there’s not much space in a newspaper to do so, but we are confident in our analysis.

Continue Reading »


Wednesday’s News Digest

Nathan Williams

Is this the end of the tax haven?
The Telegraph, October 25, 2011

EU proposal helps curb corruption but fails to tackle tax dodging
EURODAD, October 25, 2011

New UN report says criminals may have laundered $1.6 trillion in 2009
The UN News Centre, October 25, 2011

Exports to tax havens increased from 2004-05 level
The Hindu Business Line, October 25, 2011

Governments must address corporate corruption, says report
The Guardian, October 24, 2011

Continue Reading »


Consistency in Morals, Messaging, and Policy

Ann Hollingshead

flickr / Axion23

Teodoro Nguema Obiang has controlled Equatorial Guinea since he executed his uncle in a bloody coup d’état in 1979. Equatorial Guinea is a country in Middle Africa on the coast.  It is one of the smallest and wealthiest countries in the continent, in large part because it holds Africa’s largest oil reserves.  Yet the wealth is extremely concentrated in the hands of the government and the ruling elite. As a result over 75% of the population lives below $2 per day, 35% of its citizens do not live past the age of 40, and nearly 60% do not have access to safe drinking water.

Over Obiang’s three decades as president, Equatorial Guinea has witnessed many disappointments. The IMF and World Bank have both withdrawn aid programs, citing massive government corruption and theft.  The International Red Cross has accused Obiang of human rights violations. The Alliance of Professional Africans in the Diaspora has called Obiang one of Africa’s “worst dictators,” along with Zimbabwe’s Robert Mugabe and Angola’s Jose Eduardo dos Santos.

In 2009 campaign group and Task Force member Global Witness uncovered documents showing Obiang’s son, Teodorin Obiang, purchased a $38 million Gulfstream private jet, a $35 million Malibu mansion, speedboats and a fleet of luxury cars in the United States. Then, earlier this year, Global Witness revealed that Teodorin Obiang, the son of the dictator, “commissioned plans to build a superyacht worth $380 million.” That’s nearly three times the amount Equatorial Guinea spends annually on both health and education programs.

Continue Reading »


Tuesday’s News Digest

Nathan Williams

Tax haven crackdown yields 14 billion euros: OECD
Reuters, October 25, 2011

Cannes or Can’t: Can G20 fix eurozone crisis?
Russia & India Report, October 25, 2011

Swiss Banking Secrecy Has No Place in Globalized World: View
Bloomberg, October 25, 2011

Calling Out Corrupt Practices
IPS, October 24, 2011

Widespread Tax Avoidance by America’s Most Profitable Companies Documented in New Report by Citizens for Tax Justice & the Institute on Taxation and Economic Policy
iStockAnalyst, October 24, 2011

Continue Reading »


How Capital Flight Drains Africa: Stolen Money And Lost Lives

James Boyce

This article is cross-posted at TripleCrisis.com. It was co-authored by Léonce Ndikumana.

flickr / PlanetObserver

In most financial scams, the victims simply lose their money. In Africa, some lose their lives.

Sub-Saharan Africa experienced an exodus of more than $700 billion in capital flight since 1970, a sum that far surpasses the region’s external debt outstanding of roughly $175 billion. Some of the money wound up in private accounts at the same banks that were making loans to African governments.

Inflows of foreign borrowing and outflows of capital flight are closely intertwined. As we document in Africa’s Odious Debts,there is a strong correlation between the two. For every dollar of foreign borrowing, on average more than 50 cents leaves the borrower country in the same year. This tight relationship suggests that Africa’s public external debts and private external assets are connected by a financial revolving door.

How does it work? Common mechanisms include inflated procurement contracts for goods and services, kickbacks to government officials, and diversion of public funds into the bank accounts of politically influential individuals. Some of Africa’s flight capital comes from other sources, too, such as earnings from oil and mineral exports. But foreign loans make an exceptionally easy mark in that there is no need to bother with the messy business of extracting natural resources to convert them into cash.

Continue Reading »


Monday’s News Digest

Nathan Williams

Swiss Banks Said Ready to Reveal Clients
Bloomberg, October 24, 2011

The Government Allocates 300 Million Euros to Support the “Arab Spring”
Spanish Ministry of Foreign Affairs and Cooperation, October 24, 2011

India to review tax treaty with Mauritius in Dec
The Business Standard, October 24, 2011

Halliburton Probes Angolan Operations Following Email Tip
The Wall Street Journal, October 24, 2011

EAC Moves to Stop Billions in Tax Losses
East African Business Week, October 24, 2011

Continue Reading »


FACT Coalition Releases U.S. Tax Legislative Asks

EJ Fagan PDF

The Financial Accountability & Corporate Transparency (FACT) Coalition, which includes Task Force coordinating committee members Global Financial Integrity, Tax Justice Network, and Global Witness, released a document detailing their tax legislative asks yesterday. The document does a great job of detailing important ways to keep the financial system accountable, both in a domestic and international sense. The entire document can be downloaded after clicking ‘read more’ or at the ‘PDF’ link in the post title.

Here are some salient excerpts for the Task Force:


The current tax code is full of perks and preferences that create a great deal of unfairness in the tax system. Some large multinational corporations pay little or no federal income taxes, year after year, while domestic‐based businesses large and small commonly pay a quarter or even a third of their income in federal taxes. Some very wealthy taxpayers pay an effective rate almost half of that paid by middle‐income workers.

Continue Reading »


Doomed to Fail

Ann Hollingshead
Why America Won’t Let the Chamber of Commerce Weaken the Foreign Corrupt Practices Act

Yesterday I switched on the radio in my car and heard a familiar phrase. Just as I started listening, NPR had just started reading a story on the Foreign Corrupt Practices Act, or FCPA, and the recent efforts by the U.S. Chamber of Commerce to amend the law. Feeling excited, I turned up my dial.

The Chamber’s basic argument is that the FCPA, the flagship U.S. legislation that makes it illegal to bribe a foreign official, is too cumbersome on U.S. businesses. For months now, the Chamber has been lobbying to weaken the FCPA and has even retained former U.S. Attorney General Michael Mukasey to help. According to a compelling article by Raymond Baker, Director of Global Financial Integrity, the Chamber’s requests include (among many others) giving “subsidiaries of multinational companies a loose rein” with the FCPA so that the actions of a foreign subsidiary should not expose the parent company to liability and limiting successor liability in cases of mergers and acquisitions.

The Chamber and Mukasey have already won over Rep. Jim Sensenbrenner (R-Wi), who is now leading the charge to amend the FCPA. Sensenbrenner is now spending valuable Judiciary Committee time convincing other Congressmen to join him, rather than encouraging a thoughtful debate on the issue.

So back to my moment of excitement in the car. As I listened to the NPR story, which gave a pretty impartial overview of the situation, I had one, overwhelming thought: the Chamber of Commerce is going to fail.

Continue Reading »


Friday’s News Digest

Nathan Williams

What is a bribe in 2011?
CanadianBusiness.com, October 19, 2011

Exports or black money? Time for govt to investigate
Firstpost, October 21, 2011

Gadhafi’s Death Raises AML Concerns
GovInfoSecurity, October 20, 2011

US, Jamaican Officials Put Dent In International Money-Laundering Ring
The Jamaica Gleaner, October 21, 2011

East African Bribery Index (EABI) 2011 Launch: Burundi most corrupt country in East Africa as Uganda Police heads list of most bribery prone institutions
Transparency International, October 20, 2011

Continue Reading »


India Inc’s Open Letter: a Call to Arms against Corruption and Bribery

Daniel Robinson

~FreeBirD®~ / Flickr

On Monday, October 10, a variety of prominent Indian business leaders under the larger title of India Inc released their second open letter to the Indian government.  This letter argues for the need to make striking changes to India’s legislation regarding bribery and corruption.  It was written with an eye toward a newly proposed law called the Lokpal Bill which has been discussed extensively over the past year and is expected to be formally presented before India’s parliament in the near future.  This bill intends to fight corruption by creating an ombudsman-style body with the power to investigate corruption in the government and consider citizens’ complaints.

The advancement of the Lokpal Bill is the result of a push for action over both the short and long terms.  Over the past few years there has been a popular call for change underscored by allegations that India’s telecommunications minister sold mobile phone licenses to the highest bidder in 2008.   However, passing a bill of this kind is by no means a new idea for India.  According to The Times of India, Indian policymakers have unsuccessfully attempted to implement an investigatory organization of this kind a total of ten times over the last 40 years including Prime Minister Manmohan Singh’s concerted effort in 2004 which was subsequently blocked by powerful lobbying groups.

Continue Reading »

Pg 60 of 179 First...1020...59606162...7080...Last
Latest Press Releases

OECD Common Reporting Standard Not Crafted with Developing Countries in Mind

Financial Transparency Coalition · July 22, 2014

On Monday, the Organization for Economic Cooperation and Development (OECD) released detailed guidelines on the common reporting standard for automatic exchange of ...

GFI Assails Disheartening U.S.-BNP Paribas Settlement

Global Financial Integrity · July 1, 2014

WASHINGTON, DC – Global Financial Integrity (GFI) expressed skepticism today that the settlement reached between ...

G8 Has Yet to Live Up To Its Promises on Tax and Transparency

Financial Transparency Coalition · June 18, 2014

G8 countries have yet to live up to the important commitments they made on tax and transparency at their Northern Ireland summit ...