Financial Transparency Coalition http://www.financialtransparency.org Fri, 19 Dec 2014 19:56:05 +0000 en-US hourly 1 http://wordpress.org/?v=3.7.5 The Last FTC Newsletter of 2014 is here! http://www.financialtransparency.org/2014/12/19/the-last-ftc-newsletter-of-2014-is-here/ http://www.financialtransparency.org/2014/12/19/the-last-ftc-newsletter-of-2014-is-here/#comments Fri, 19 Dec 2014 19:56:05 +0000 http://www.financialtransparency.org/?p=25718 As the year comes to a close, we’ve taken a long look at all that has been accomplished in 2014, and there’s been a lot of change! We’ve released our final newsletter for 2014, which will give an overview of what’s happened on the financial transparency front over the past 3 months.

Some of the highlights include:

  • G20 recognizes importance of collecting beneficial ownership information for companies
  • FTC hosts global conference on illicit financial flows in Lima, Peru
  • European negotiators reach deal to create central registers of beneficial ownership information in the EU
  • FTC named to European Commission expert group on the automatic exchange of financial information

To read the whole newsletter, click here.

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TaxCast: December 2014 http://www.financialtransparency.org/2014/12/18/taxcast-december-2014/ http://www.financialtransparency.org/2014/12/18/taxcast-december-2014/#comments Thu, 18 Dec 2014 21:04:04 +0000 http://www.financialtransparency.org/?p=25711 TJNlogoDecember's installment of the Tax Justice Network's TaxCast has arrived. The podcast, produced by Naomi Fowler, covers all things related to corruption and tax. In the December 2014 Taxcast: how Mafia is corrupting democracy at the heart of Europe in Italy’s capital city of Rome. Also: the #LuxLeaks whistleblower is arrested and makes his first public statements on why he did it, the UK Chancellor’s new ‘Google Tax’, is the EU Commission President Jean Claude Juncker backing away from making a register of real owners of companies and trusts public? And more scandal and unique analysis.]]> TJNlogoDecember’s installment of the Tax Justice Network‘s TaxCast has arrived. The podcast, produced by Naomi Fowler, covers all things related to corruption and tax.

In the December 2014 Taxcast: how Mafia is corrupting democracy at the heart of Europe in Italy’s capital city of Rome. Also: the #LuxLeaks whistleblower is arrested and makes his first public statements on why he did it, the UK Chancellor’s new ‘Google Tax’, is the EU Commission President Jean Claude Juncker backing away from making a register of real owners of companies and trusts public? And more scandal and unique analysis.

Listen via the embed below, or on YouTube.

 

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$2 lost for every $1 gained: New report shows global financial system fails developing countries http://www.financialtransparency.org/2014/12/18/2-lost-for-every-1-gained-new-report-shows-global-financial-system-fails-developing-countries/ http://www.financialtransparency.org/2014/12/18/2-lost-for-every-1-gained-new-report-shows-global-financial-system-fails-developing-countries/#comments Thu, 18 Dec 2014 14:47:10 +0000 http://www.financialtransparency.org/?p=25704 The State of Development Finance for Developing Countries, 2014 – has found that for every dollar developing countries have earned since 2008, they have lost $2.07. Furthermore they have lost, on average, more than 10 per cent of their Gross Domestic Product (GDP) through these financial losses.]]> 1130824Developing countries are losing twice as much money as they earn because of issues like tax evasion, profits taken out by foreign investors and interest repayments on debt.

A new report – The State of Development Finance for Developing Countries, 2014 – has found that for every dollar developing countries have earned since 2008, they have lost $2.07.

Furthermore they have lost, on average, more than 10 per cent of their Gross Domestic Product (GDP) through these financial losses. 

Report author Jesse Griffiths, Director of the European Network on Debt and Development (Eurodad), said: “The results of our research are shocking. We are not talking about all flows of money out of developing countries, just lost resources – money that should have been invested to support development, and was instead drained out. It is outrageous that the global financial system is skewed so much against developing countries.”

The report finds that:

  • The biggest loss was through illicit financial flows – money that was illegally earned, transferred or used – which cost developing countries $634 billion (€509 billion) in 2011.
  • The second biggest loss is the profits extracted from developing countries by foreign investors: totalling $486 billion in 2012. In fact, since 2008, foreign investors have been taking more profits out of developing countries than new investments have been coming in.
  • The third biggest loss is the money that developing countries are lending rich countries by buying (mainly US) bonds. This totalled 1.2% of their GDP – $276 billion (€222 billion) in 2012.
  • The fourth biggest loss for developing countries is interest repayments on foreign debt, totalling $188 billion (€151 billion) in 2012.

These losses far outweighed financial inflows through foreign direct investment, aid, portfolio equity (stocks and shares), charitable money and remittances from migrant workers.

eurodadINFOGRAPHIC

Jesse Griffiths said: “What is clear is that the global economic system is failing developing countries. However, the solutions are on the table. For example, the UN has promised to create an international legal framework that would introduce a fair and rapid way of resolving debt crises by the end of 2015: it’s time to hold them to that promise.”

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To read the full report, click here.

For more information, or to request an interview, please contact Julia Ravenscroft, Communications Manager at Eurodad, on +32 2 893 0854.

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Eurodad and Tax Justice Network Named to List of “Global Tax 50” http://www.financialtransparency.org/2014/12/17/eurodad-and-tax-justice-network-named-to-list-of-global-tax-50/ http://www.financialtransparency.org/2014/12/17/eurodad-and-tax-justice-network-named-to-list-of-global-tax-50/#comments Wed, 17 Dec 2014 20:05:30 +0000 http://www.financialtransparency.org/?p=25700 WASHINGTON D.C.—The Financial Transparency Coalition congratulates two members of its Coordinating Committee who were named to the International Tax Review’s “Global Tax 50”, a yearly list of the most influential people and organizations in the tax world. The Brussels-based European Network on Debt and Development (Eurodad) and the UK’s Tax Justice Network were featured among other influential voices, like the International Consortium of Investigative Journalists, Pascal Saint-Amans of the OECD, and the International Monetary Fund.]]> WASHINGTON D.C.—The Financial Transparency Coalition congratulates two members of its Coordinating Committee who were named to the International Tax Review’s “Global Tax 50”, a yearly list of the most influential people and organizations in the tax world.

The Brussels-based European Network on Debt and Development (Eurodad) and the UK’s Tax Justice Network were featured among other influential voices, like the International Consortium of Investigative Journalists, Pascal Saint-Amans of the OECD, and the International Monetary Fund.

“We are thrilled that TJN and Eurodad are being recognized for their tireless efforts and cutting-edge approaches to tax policy,” said Porter McConnell, Manager of the Financial Transparency Coalition. “To be among a list of so many influential figures in the tax world is a testament to the work both organizations have carried out in 2014.”

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Note to Editors:

  1. The Financial Transparency Coalition is a global network of over 150 NGOs spanning five continents, 13 governments, and dozens of experts. We work to curtail illicit financial flows through the promotion of a transparent, accountable, and sustainable financial system that works for everyone.
  2. Contact:

            Christian Freymeyer, cfreymeyer@financialtransparency.org, +1.410.490.6850

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EU compromise tightens regulation on shell companies, but without public access, many still in the dark http://www.financialtransparency.org/2014/12/17/eu-compromise-tightens-regulation-on-shell-companies-but-without-public-access-many-still-in-the-dark/ http://www.financialtransparency.org/2014/12/17/eu-compromise-tightens-regulation-on-shell-companies-but-without-public-access-many-still-in-the-dark/#comments Wed, 17 Dec 2014 13:15:06 +0000 http://www.financialtransparency.org/?p=25693 BRUSSELS — In a deal reached last night, parliamentarians and campaigners have succeeded in making company ownership a fundamental topic. While EU nations have agreed to centralized registers of company ownership information, there is still work to be done to ensure full transparency and public access. “The amount of progress made over the last year and a half is encouraging, and the fact that all EU nations agreed to centralized registers is a significant step,” said Koen Roovers of the Financial Transparency Coalition. “But with countries like Denmark, France, the U.K. and Ukraine announcing commitments to public access, the European Union should see the writing on the wall.”]]> EU nations agree to national registers of company ownership information, but deal on 4th Anti-Money Laundering Directive doesn’t ensure public access 

BRUSSELS — In a deal reached last night, parliamentarians and campaigners have succeeded in making company ownership a fundamental topic. While EU nations have agreed to centralized registers of company ownership information, there is still work to be done to ensure full transparency and public access.

“The amount of progress made over the last year and a half is encouraging, and the fact that all EU nations agreed to centralized registers is a significant step,” said Koen Roovers of the Financial Transparency Coalition. “But with countries like Denmark, France, the U.K. and Ukraine announcing commitments to public access, the European Union should see the writing on the wall.”

Public registers of the real, human owners of companies would aid authorities, journalists, and civil society in tracking down criminals and the corrupt, who use anonymous companies to hijack the financial system. Unfortunately, the compromise reached only guarantees access to members of the public if they can prove a “legitimate interest”.

“Requiring the public to prove a “legitimate interest” is contradictory to the idea of transparency, and places all the burden on the public, rather than the potential criminals who are treating the European financial system like their personal launderette,” said Nienke Palstra of Transparency International.

Although the European Parliament overwhelmingly voted in favor of public registers earlier this year, the final AMLD agreement will not include full public access, and it’s possible that the EU may not review the AMLD again for years.

“In a world where money moves a mile a millisecond, without public registers we’re giving criminals and their enablers years to figure out the best ways to continue exploiting the system,” said Christian Hallum of Eurodad.

“Over 20 years, our investigations have shown the damage done by this loophole,” said Robert Palmer, Money Laundering campaign leader at Global Witness. “It is the getaway car for crime and corruption. In the last two years we’ve seen real progress, with the issue making it onto the global political agenda. We now urge all member states to follow the example of the UK and give the public access to these new registers”.

###

Note to Editors:

  1. The Financial Transparency Coalition is a global network of over 150 NGOs spanning five continents, 13 governments, and dozens of experts. We work to curtail illicit financial flows through the promotion of a transparent, accountable, and sustainable financial system that works for everyone.
  2. Contacts:

            Christian Freymeyer, cfreymeyer@financialtransparency.org+1.410.490.6850 

            Verena von Derschauvvonderschau@financialtransparency.org+33.6.95.43.29.28

 


En Français

Un compromis de l’UE renforce la réglementation sur les sociétés fantômes, mais sans accès public des zones d’ombre persistent

Les pays membres de l’UE se sont engagés à créer des registres nationaux d’information sur les bénéficiaires effectifs de sociétés, mais l’accord sur la 4e directive anti-blanchiment ne garantit pas l’accès du public à ces registres.

BRUXELLES — Dans accord conclu la nuit dernière, parlementaires européens et militants ont réussi à faire de la propriété effective des entreprises un sujet fondamental. Alors que les pays de l’UE ont convenu de créer des registres centralisés d’information sur les véritables propriétaires d’entreprises, il reste du travail à accomplir pour en assurer la pleine transparence et l’accès public.

“Les progrès réalisés au cours de la dernière année et demie sont encourageants, et le fait que tous les pays de l’UE aient convenu de registres centralisés est une étape importante”, a déclaré Koen Roovers de Financial Transparency Coalition (FTC). “Mais avec des pays comme le Danemark, la France, le Royaume-Uni et l’Ukraine qui ont pris des engagements en faveur de l’accès du public à ces registres, il aurait suffi à l’Union européenne de les copier”.

Des registres publics révélant l’identité de l’humain se cachant derrière une société aideraient les autorités, les journalistes et la société civile dans la traque des criminels et des corrompus, qui utilisent les sociétés anonymes pour prendre en otage le système financier. Malheureusement, le compromis atteint ne permet l’accès au public que s’il peut prouver un “intérêt légitime”.

“Exiger que le public démontre un ‘intérêt légitime’ est en contradiction avec l’idée de transparence, et fait peser la charge de la preuve sur le public, plutôt que sur les criminels potentiels qui se servent du système financier européen comme si c’était leur laverie personnelle”, a regretté Nienke Palstra de Transparency International.

Bien que le Parlement européen ait massivement voté en faveur de registres publics plus tôt cette année, l’accord final sur la directive ne prévoit pas de plein accès au public, et il est possible que l’UE ne réexamine pas ce texte avant des années.

“Dans un monde où l’argent se déplace d’un kilomètre en une milliseconde, sans registres publics, nous donnons des années supplémentaires aux criminels et à leurs facilitateurs pour trouver les meilleurs moyens d’exploiter le système”, a renchéri Christian Hallum d’Eurodad.

“Depuis plus de 20 ans, nos enquêtes montrent les dégâts causés par cette lacune”, a rappelé Robert Palmer, le directeur de la campagne anti-blanchiment chez Global Witness. “C’est le véhicule de fuite pour le crime et la corruption. Au cours des deux dernières années, nous avons vu des progrès réels, et la question est désormais à l’agenda politique mondial. Nous exhortons maintenant tous les Etats membres de l’UE à suivre l’exemple du Royaume-Uni et de donner au public l’accès à ces nouveaux registres”.

Note aux rédacteurs:

[1] La Financial Transparency Coalition est un réseau mondial de neuf ONG, implantées sur les cinq continents, et de 150 organisations alliées. Nous luttons pour la réduction des flux financiers illicites à travers la promotion d’un système financier transparent, responsable et durable au service de tous.

[2] Contacts :

Christian Freymeyer (anglais) - cfreymeyer@financialtransparency.org - +1 410 490 6850

Verena von Derschau (français) - vvonderschau@financialtransparency.org - +33 6 95 43 29 28


Deutsch

EU-Kompromiss verschärft Verordnung über Briefkastenfirmen, aber ohne Zugang der Öffentlichkeit bleibt vieles im Dunkeln

EU-Staaten verpflichten sich nationale Register der Eigentumsverhältnisse von Unternehmen zu gründen, aber die Einigung zur 4. Anti-Geldwäsche-Richtlinie gewährleistet der Öffentlichkeit wenig Zugang

BRÜSSEL – Im Rahmen der gestern Abend beendeten Verhandlungen, gelang es Abgeordneten und Aktivisten die Gründung von Unternehmenseigentum zu einem grundlegenden Thema zu machen. Die EU-Staaten haben beschlossen zentrale Register über die Eigentumsverhältnisse von Unternehmen zu erstellen, es bleibt aber noch viel zu tun, um volle Transparenz und den Zugang der Öffentlichkeit zu gewährleisten.

“Die Fortschritte die in den letzten eineinhalb Jahren gemacht wurden sind ermutigend, und die Tatsache, dass alle EU-Staaten zentrale Register anlegen werden ist ein wichtiger Schritt”, sagte Koen Roovers von der Financial Transparency Coalition (FTC). “Aber wo Länder wie Dänemark, Frankreich, Großbritannien und die Ukraine die sich verpflichtet haben der Öffentlichkeit Zugang zu ihren Registern zu geben, hätte die Europäische Union die Zeichen sehen sollen”.

Öffentliche Register zu den realen, menschlichen Eigentümern von Unternehmen würden Behörden, Journalisten und der Zivilgesellschaft beim Aufspüren von Kriminellen und Korrupten helfen, die  anonyme Unternehmen nutzen um das Finanzsystem zu missbrauchen. Leider gewährleistet der Kompromiss nur den Personen Zutritt, die ein “berechtigtes Interesse” vorweisen können.

“Die Forderung dass die Öffentlichkeit ein ‚berechtigtes Interesse‘ beweisen muss steht im Widerspruch zu der Idee der Transparenz und legt die ganze Last des Beweises auf die Schultern der Öffentlichkeit, und nicht der potentiellen Verbrecher, die das europäische Finanzsystem wie ihren persönlichen Waschsalon benutzen”, bedauerte auch Nienke Palstra von Transparency International.

Obwohl das Europäische Parlament am Anfang des Jahres mit überwältigender Mehrheit für öffentliche Register gestimmt hat, wird die endgültige Anti-Geldwäsche Vereinbarung keinen vollen öffentlichen Zugang vorhersehen, und es ist möglich, dass dieser Text in den nächsten Jahren nicht neu verhandelt wird.

“In einer Welt, wo das Geld geht in einer Millisekunde Kilometer zurücklegt, und ohne öffentliche Register, geben wir Kriminellen und ihren Zwischenmännern Jahre Zeit, um die besten Möglichkeiten herauszufinden das System auch weiterhin zu benutzen”, so Christian Hallum von Eurodad.

“In den letzten 20 Jahren haben unsere Untersuchungen den Schaden den dieses Schlupfloch anrichtet bewiesen”, sagte Robert Palmer, Leiter der Anti-Geldwäsche-Kampagne bei Global Witness. “Es ist das Fluchtauto für Kriminalität und Korruption. In den letzten zwei Jahren haben wir echte Fortschritte gesehen, und die Frage steht auf dem globalen politischen Agenda. Wir fordern nun alle Mitgliedstaaten auf, dem Beispiel des Vereinigten Königreichs zu folgen und der Öffentlichkeit Zugang zu diesen neuen Register zu geben”.

Hinweis für Redakteure:

[1] Die FTC ist ein globales Netzwerk von neun NGOs auf fünf Kontinenten, und 150 verbündeten Organismen. Wir kämpfen gegen illegale Finanzströme und für die Entstehung eines transparenten, verantwortlichen und nachhaltigen Finanzsystems für alle.

[2] Kontakte:

Christian Freymeyer (Englisch) - cfreymeyer@financialtransparency.org - +1 410 490 6850

Verena von Derschau (Deutsch) - vvonderschau@financialtransparency.org - +33 6 95 43 29 28

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New Study: Crime, Corruption, Tax Evasion Drained a Record US$991.2bn in Illicit Financial Flows from Developing Economies in 2012 http://www.financialtransparency.org/2014/12/15/new-study-crime-corruption-tax-evasion-drained-a-record-us991-2bn-in-illicit-financial-flows-from-developing-economies-in-2012/ http://www.financialtransparency.org/2014/12/15/new-study-crime-corruption-tax-evasion-drained-a-record-us991-2bn-in-illicit-financial-flows-from-developing-economies-in-2012/#comments Mon, 15 Dec 2014 23:22:24 +0000 http://www.financialtransparency.org/?p=25685 WASHINGTON, DC – A record US$991.2 billion in illicit capital flowed out of developing and emerging economies in 2012—facilitating crime, corruption, and tax evasion—according to the latest study released Tuesday by Global Financial Integrity (GFI), a Washington, DC-based research and advisory organization. The study is the first GFI analysis to include estimates of illicit financial flows for 2012. The report—GFI’s 2014 annual global update on illicit financial flows—pegs cumulative illicit outflows from developing economies at US$6.6 trillion between 2003 and 2012, the latest year for which data is available.  Titled “Illicit Financial Flows from Developing Countries: 2003-2012,” [HTML |PDF] the report finds that illicit outflows are growing at an inflation-adjusted 9.4 percent per year—roughly double global GDP growth over the same period.]]> Illicit Flows from Developing & Emerging Countries Growing at 9.4% per Year

US$6.6 Trillion Stolen from Developing World from 2003-2012; Trade Misinvoicing Responsible for 77.8% of Illicit Outflows

China, Russia, Mexico, India, Malaysia—in Declining Order—Are Biggest Exporters of Illicit Capital over Decade; Sub-Saharan Africa Still Suffers Biggest Illicit Outflows as % of GDP

Study Calls for UN Sustainable Development Goals to Halve Annual Trade-Related Illicit Flows by 2030; Recommends Public Registries of Beneficial Ownership; Urges Public Country-by-Country Reporting for Multinationals

WASHINGTON, DC – A record US$991.2 billion in illicit capital flowed out of developing and emerging economies in 2012—facilitating crime, corruption, and tax evasion—according to the latest study released Tuesday by Global Financial Integrity (GFI), a Washington, DC-based research and advisory organization. The study is the first GFI analysis to include estimates of illicit financial flows for 2012.

Illicit Financial Flows from Developing Countries: 2003-2012 The report—GFI’s 2014 annual global update on illicit financial flows—pegs cumulative illicit outflows from developing economies at US$6.6 trillion between 2003 and 2012, the latest year for which data is available.  Titled “Illicit Financial Flows from Developing Countries: 2003-2012,” [HTML |PDF] the report finds that illicit outflows are growing at an inflation-adjusted 9.4 percent per year—roughly double global GDP growth over the same period.

“As this report demonstrates, illicit financial flows are the most damaging economic problem plaguing the world’s developing and emerging economies,” said GFI PresidentRaymond Baker, a longtime authority on financial crime. “These outflows—already greater than the combined sum of all FDI and ODA flowing into these countries—are sapping roughly a trillion dollars per year from the world’s poor and middle-income economies.”

“Most troubling, however, is the fact that these outflows are growing at an alarming rate of 9.4 percent per year—twice as fast as global GDP,” continued Mr. Baker.  “It is simply impossible to achieve sustainable global development unless world leaders agree to address this issue head-on.  That’s why it is essential for the United Nations to include a specific target next year to halve all trade-related illicit flows by 2030 as part of post-2015 Sustainable Development Agenda.”

Findings

Authored by GFI Chief Economist Dev Kar and GFI Junior Economist Joseph Spanjers, the study reveals that illicit financial flows hit an historic high of US$991.2 billion in 2012—marking a dramatic increase from 2003, when illicit outflows totaled a mere US$297.4 billion.  Over the span of the decade, the report finds that illicit financial flows are growing at an inflation-adjusted average rate of 9.4 percent per year.  Still, in many parts of the world, the authors note that illicit flows are growing much faster—particularly in the Middle East and North Africa (MENA) and in Sub-Saharan Africa, where illicit flows are growing at an average annual inflation-adjusted rate of 24.2 and 13.2 percent, respectively.

Totaling US$6.6 trillion over the entire decade, illicit financial flows averaged a staggering 3.9 percent of the developing world’s GDP.  As a share of its economy, Sub-Saharan Africa suffered the largest illicit financial outflows—averaging 5.5 percent of its GDP—followed by developing Europe (4.4 percent), Asia (3.7 percent), MENA (3.7 percent), and the Western Hemisphere (3.3 percent).

“It’s extremely troubling to note just how fast illicit flows are growing,” stated Dr. Kar, the principal author of the study.  “Over the past decade, illicit outflows from developing countries increased by 9.4 percent each year in real terms, significantly outpacing economic growth.  Moreover, these outflows are growing fastest in and taking the largest toll—as a share of GDP—on some of the poorest regions of the world.  These findings underscore the urgency with which policymakers should address illicit financial flows.”

Trade Misinvoicing Dominant Channel

The fraudulent misinvoicing of trade transactions was revealed to be the largest component of illicit financial flows from developing countries, accounting for 77.8 percent of all illicit flows—highlighting that any effort to significantly curtail illicit financial flows must address trade misinvoicing.

Major Global Development Implications

The US$991.2 billion that flowed illicitly out of developing countries in 2012 was greater than the combined total of foreign direct investment (FDI) and net official development assistance (ODA), which these economies received that year. Illicit outflows were roughly 1.3 times the US$789.4 billion in total FDI, and they were 11.1 times the US$89.7 billion in ODA that these economies received in 2012.

“Illicit financial flows have major consequences for developing economies,” explained Mr. Spanjers, the report’s co-author.  “Emerging and developing countries hemorrhaged a trillion dollars from their economies in 2012 that could have been invested in local businesses, healthcare, education, or infrastructure.  This is a trillion dollars that could have contributed to inclusive economic growth, legitimate private-sector job creation, and sound public budgets.  Without concrete action addressing illicit outflows, the drain on the developing world is only going to grow larger.”

Country Rankings

Dr. Kar and Mr. Spanjers’ research tracks the amount of illegal capital flowing out of 151 different developing and emerging countries over the 10-year period from 2003 through 2012, and it ranks the countries by the volume of illicit outflows. According to the report, the 25 biggest exporters of illicit financial flows over the decade are:

  1. China……… US$125.24bn average (US$1.25tr cumulative)
  2. Russia…………….. US$97.39bn avg. (US$973.86bn cum.)
  3. Mexico…………….. US$51.43bn avg. (US$514.26bn cum.)
  4. India……………….. US$43.96bn avg. (US$439.59bn cum.)
  5. Malaysia…………. US$39.49bn avg. (US$394.87bn cum.)
  6. Saudi Arabia……. US$30.86bn avg. (US$308.62bn cum.) 1
  7. Brazil……………… US$21.71bn avg. (US$217.10bn cum.)
  8. Indonesia……….. US$18.78bn avg. (US$187.84bn cum.)
  9. Thailand…………. US$17.17bn avg. (US$171.68bn cum.)
  10. Nigeria…………… US$15.75bn avg. (US$157.46bn cum.)
  11. A.E………………… US$13.53bn avg. (US$135.30bn cum.) 1
  12. South Africa……… US$12.21bn avg. (US$122.14bn cum.)
  13. Iraq…………………. US$11.14bn avg. (US$89.10bn cum.) 2
  14. Costa Rica………… US$9.40bn avg. (US$94.03bn cum.)
  15. Philippines……….. US$9.35bn avg. (US$93.49bn cum.)
  16. Belarus……………. US$8.45bn avg. (US$84.53bn cum.)
  17. Poland……………… US$5.31bn avg. (US$53.12bn cum.)
  18. Panama…………… US$4.85bn avg. (US$48.48bn cum.)
  19. Serbia……………… US$4.57bn avg. (US$45.66bn cum.)
  20. Chile……………….. US$4.56bn avg. (US$45.64bn cum.)
  21. Brunei…………….. US$4.30bn avg. (US$34.40bn cum.) 3
  22. Syria………………. US$3.77bn avg. (US$37.68bn cum.)
  23. Egypt……………… US$3.77bn avg. (US$37.68bn cum.)
  24. Paraguay………… US$3.70bn avg. (US$36.97bn cum.)
  25. Venezuela……….. US$3.68bn avg. (US$36.77bn cum.)

For a complete ranking of average annual illicit financial outflows by country, please refer to Appendix Table 2 of the report on page 28.  The rankings can also bedownloaded here [Excel].

GFI also found that the top exporters of illegal capital in 2012 were:

  1. China…………………….….. US$249.57bn
  2. Russia……………………….. US$122.86bn
  3. India…………………….…….. US$94.76bn
  4. Mexico……………………….. US$59.66bn
  5. Malaysia ………………….. US$48.93bn
  6. Saudi Arabia……………….. US$46.53bn
  7. Thailand………………….…. US$35.56bn
  8. Brazil…………………………. US$33.93bn
  9. South Africa………………… US$29.13bn
  10. Costa Rica…………………… US$21.55bn
  11. Indonesia……………………. US$20.82bn
  12. A.E…………………………… US$19.40bn
  13. Iraq……………………..……. US$14.65bn
  14. Belarus…………………..… US$13.90bn
  15. Philippines……………….… US$9.16bn
  16. Syria…………………….…….. US$8.64bn
  17. Nigeria…………………..…… US$7.92bn
  18. Trinidad & Tobago…………. US$7.41bn
  19. Vietnam…………………..…. US$6.93bn
  20. Lithuania………………….. US$6.45bn
  21. Libya…………………….…… US$5.40bn
  22. Panama……………………. US$5.34bn
  23. Aruba…………………….… US$5.29bn
  24. Egypt…………………….… US$5.09bn
  25. Chile…………………….…. US$5.08bn

An alphabetical listing of illicit financial outflows is available by year for each country in Appendix Table 3 on pg. 30 of the report, or it can be downloaded here [Excel].

Policy Recommendations

The report recommends that world leaders focus on curbing the opacity in the global financial system, which facilitates these outflows. Specifically, GFI maintains that:

  • Governments should establish public registries of meaningful beneficial ownership information on all legal entities;
  • Financial regulators should require that all banks in their country know the true beneficial owner(s) of any account opened in their financial institution;
  • Government authorities should adopt and fully implement all of the Financial Action Task Force’s (FATF) anti-money laundering recommendations;
  • Regulators and law enforcement authorities should ensure that all of the anti-money laundering regulations, which are already on the books, are strongly enforced;
  • Policymakers should require multinational companies to publicly disclose their revenues, profits, losses, sales, taxes paid, subsidiaries, and staff levels on a country-by-country basis;
  • All countries should actively participate in the worldwide movement towards the automatic exchange of tax information as endorsed by the OECD and the G20;
  • Trade transactions involving tax haven jurisdictions should be treated with the highest level of scrutiny by customs, tax, and law enforcement officials;
  • Governments should significantly boost their customs enforcement, by equipping and training officers to better detect intentional misinvoicing of trade transactions; and
  • The United Nations should adopt a clear and concise Sustainable Development Goal (SDG) to halve trade-related illicit financial flows by 2030 and similar language should be included in the outcome document of the Financing for Development Conference in July 2015.

Methodology

There are no methodological changes between this report and GFI’s 2013 annual update.  To conduct the study, Dr. Kar and Mr. Spanjers analyzed discrepancies in balance of payments data and direction of trade statistics (DOTS), as reported to the IMF, in order to detect flows of capital that are illegally earned, transferred, and/or utilized.

“The estimates provided by our methodology are extremely conservative as they do not include trade misinvoicing in services, same-invoice trade misinvoicing, hawala transactions, and dealings conducted in bulk cash,” explained Dr. Kar, who served as a Senior Economist at the International Monetary Fund before joining GFI in January 2008.  “This means that many forms of abusive transfer pricing by multinational corporations as well as much of the proceeds of drug trafficking, human smuggling, and other criminal activities, which are often settled in cash, are not included in these estimates.”

###

Footnotes:

  1. Illicit financial outflow estimates from the oil exporting nations of Saudi Arabia and the United Arab Emirates should be viewed with caution as they could be inflated due to opaque transactions with their nation’s sovereign wealth funds. As such, these nations were omitted from Table F on page 13 of the report.  For more information, consult Appendix Table 15 on page 77 of GFI’s 2012 annual study, “Illicit Financial Flows from Developing Countries: 2001-2010.”
  2. Data for Iraq were unavailable in 2003-2004, thus the average illicit outflows of US$11.14 billion reflect only the years 2005-2012. Likewise, Iraq’s cumulative outflows of US$89.10 billion are cumulative outflows for 2005 through 2012 only.
  3. Data for Brunei were not available in 2010 and 2011, thus the average illicit outflows of US$4.30 billion reflect only the years 2003-2009 and 2012. Likewise, the cumulative outflows of US$42.99 billion for Brunei are cumulative outflows for 2003 through 2009 plus 2012 only.

Notes to Editors:

  • Click here to read an HTML version of this press release on our website. A PDF of this press release can also be downloaded here [PDF].
  • More information about the GFI report is available on the GFI website here. A PDF of the full report can be downloaded here [PDF].  All report data can be downloaded here [Excel].
  • A tip sheet for journalists can be downloaded here [PDF].
  • An Excel spreadsheet with full country rankings by average annual illicit financial flows is available here [Excel].
  • An Excel spreadsheet with country rankings by 2012 illicit financial flows is available here [Excel].
  • An alphabetical listing of total illicit financial flows data for each country and each year is available here [Excel].
  • To schedule an interview with Mr. Baker, Dr. Kar, Mr. Spanjers, or other GFI spokespersons on this report, contact Clark Gascoigne at +1 202 293 0740, ext. 222 or cgascoigne@gfintegrity.org. On-camera spokespersons are available in Washington, DC.
  • All monetary values are expressed in U.S. dollars (USD).

Journalist Contact:

Clark Gascoigne
cgascoigne@gfintegrity.org
+1 202 293 0740, ext. 222

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Tax haven whistleblowers: where are the human rights organisations? http://www.financialtransparency.org/2014/12/12/tax-haven-whistleblowers-where-are-the-human-rights-organisations/ http://www.financialtransparency.org/2014/12/12/tax-haven-whistleblowers-where-are-the-human-rights-organisations/#comments Fri, 12 Dec 2014 20:25:19 +0000 http://www.financialtransparency.org/?p=25674 TJNlogoWe are big fans of human rights organisations, generally speaking, but we’re going to say some uncomfortable things about some of them here. Yesterday we noted that Rudolf Elmer, the Swiss whistleblower who has been persecuted for years by the Swiss tax haven industry, via the Swiss courts and other arms of Swiss state, collapsed in court during a trial where he is accused of breaking Swiss banking secrecy laws. He has already spent five months in prison and he faces more: read the background here. The Swiss establishment and media has mostly focused on Elmer the man, rather than the wider issues: many powerful people in rich and poor countries were implicated in the leaks.]]> This article is cross-posted from the Tax Justice Network‘s blog with their permission. 

 
TJNlogo

We are big fans of human rights organisations, generally speaking, but we’re going to say some uncomfortable things about some of them here.

Yesterday we noted that Rudolf Elmer, the Swiss whistleblower who has been persecuted for years by the Swiss tax haven industry, via the Swiss courts and other arms of Swiss state, collapsed in court during a trial where he is accused of breaking Swiss banking secrecy laws. He has already spent five months in prison and he faces more: read the background here.

The Swiss establishment and media has mostly focused on Elmer the man, rather than the wider issues: many powerful people in rich and poor countries were implicated in the leaks.

Elmer’s case is complex and he has made some mistakes, but ultimately this is the case of a tax haven showing its long claws and sharp teeth and attacking those who bring transparency.

This is troubling enough in itself. But the next question we want to ask is this: where are the human rights organisations on his case?

Why are they not jumping up and down about these issues? Why are they not putting pressure on the Swiss government, and providing moral and material support to Elmer? He has complained privately to us that he cannot get the international support he needs. If there is one kind of organisation that should be engaging on cases like his, it is human rights organisations (and the likes of TJN too, of course, but our resources are pitifully small, and unable to cope with such a project).

Elmer is not the only Swiss tax haven whistleblower. There is Hervé Falciani, who blew the whistle on the financial crimes of HSBC Switzerland, and is now in hiding in Spain: news of renewed persecution emerged today. See this interview to get a flavour. Have human rights organisations weighed in to support him? We don’t think so, but we will also provide them with opportunities to comment and disagree with us (get in touch: write us a guest blog!), and on cases such asChristoph Meili (who exposed appalling Swiss banking Nazi gold crimes) or Bradley Birkenfeld, the UBS whistleblower.

And it’s not just about Switzerland, nor, to be honest, is this just about whistleblowers.

When, for example, did a human rights organisation complain about the fact that the Cayman Islands has a law where you can go to prison not just for revealing confidential private sector information, but merely for asking for it? (And Cayman is far from the worst offender.) When have they taken large accountancy firms to task for their roles in setting up complex schemes that suck billions of dollars in revenues from developing countries, depriving their citizens of basic rights like water and healthcare?

Large human rights organisations (see a long list of large and small ones here) seem to have gone AWOL in the case of many tax haven-related abuses. A few lesser-known groups are, it is true, starting to engage in this field – see our Human Rights webpage for more details of the first flowerings in this area – but the big hitters do not seem to be there yet. We are at the beginning of a long road.

Now here comes the particularly harsh question, and commentary.

Tax havens involve, or are protected by, some of the most powerful countries in the world. SeeBritain’s role here, for instance, or that of the United States.

Human rights organisations are extremely good at criticising the governments of poor countries around the world – and rightly so. But are they prepared to take on the bruisers in the West: to challenge those governments in rich countries that are also substantially funding them?

We at TJN think this is a big test of their mettle.

Take Africa, for instance. Large human rights groups have weighed in very effectively on the looting of that continent, on many occasions. They have even criticised western multinational corporations where they have been complicit.

But have they criticised those countries and law and accountancy firms that are helping shelter the funds looted from Africa? Have they commented widely on the secrecy that breeds political impunity that enables Africa’s wealthiest and most powerful élites to loot their countries and get away with it?

There’s been a bit of it, but we have not yet seen the level of engagement that is now required.  We are confident that it will come: the arguments are, well, unarguable.

In fact, a great opportunity exists here for human rights groups in this terrain, not just by virtue of the rich research and advocacy possibilities.

Governments in poor countries — particularly the repressive ones — tend to have a heavily conflicted relationship with human rights organisations. This is inevitable, and it is in one sense a measure of these organisations’ success in pointing fingers and speaking truth to power.

But it would also be useful for them to find ways to have more collaborative engagements. This agenda – tax havens – could be a way to create a basis for a new kind of relationship with the governments of developing countries. By pointing the finger at tax havens and the rich-world countries that protect them, they may well find that many people in the governments (and societies) of developing countries will start to see the potential for a shared agenda, where the corrupt oppressors aren’t just located in poor countries.

We at TJN have been very successful in changing perceptions of corruption in exactly this way: this was one of the purposes of our Financial Secrecy Index, which was designed to take a more holistic look at the drivers of corruption. (There’s a new book on this coming out soon too.)

In fact, human rights organisations will find instances of oppression and human rights abuses in tax haven after tax haven. Take Jersey, for example, the most British of all tax havens, and the most important single haven to Britain. Here’s an excerpt from a plea made by politicians in Jersey, not so long ago:

““Our island’s ‘justice’ system has become a tool of oppression rather than arbiter of fairness and protection for all ordinary citizens.  Complaints alleging corruption being brought to a number of politicians can now simply no longer be ignored. The reported abuses are as diverse as the members of the public bringing them to us.”

Then, from the press release itself:

“Our Law Office has become the tool of choice for the clique at the apex of power to try to silence and, if necessary, drive from office or ruin those who dare challenge the established order.

This is not bombast. Go to Jersey, speak to financial dissidents, and you will see what we mean. This island feels very British indeed, but under the surface it is a different creature altogether, with a silent stream human rights and other abuses beneath the surface.

There is work to be done here. Whether it is supporting whistleblowers like Rudolf Elmer, of working on UN sanctions, or on an ocean of economic crimes committed around the world, it is time to roll up the sleeves and get stuck in.

Tax justice and human rights: watch this space.

And do read our Human Rights edition of Tax Justice Focus, our newsletter.

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Juncker Responds to Letter Sent by Investigative Journalists from Around the World http://www.financialtransparency.org/2014/12/12/juncker-responds-to-letter-sent-by-investigative-journalists-from-around-the-world/ http://www.financialtransparency.org/2014/12/12/juncker-responds-to-letter-sent-by-investigative-journalists-from-around-the-world/#comments Fri, 12 Dec 2014 16:21:29 +0000 http://www.financialtransparency.org/?p=25668 13598001865_9dd7e6a541_zJean Claude Juncker, President of the European Commission, has just responded to a letter sent to him by more than 40 leading investigative journalists. The letter urged President Juncker to ensure the creation of public registers of beneficial ownership information as part of the ongoing negotiations of the EU's 4th Anti-Money Laundering Directive. Beneficial ownership information would provide authorities, journalists, and civil society with information on who actually owns or profits from a company. The European Parliament already approved such registers overwhelmingly in March, with a vote of 643-30.]]> 13598001865_9dd7e6a541_zJean Claude Juncker, President of the European Commission, has just responded to a letter sent to him by more than 40 leading investigative journalists. The letter urged President Juncker to ensure the creation of public registers of beneficial ownership information as part of the ongoing negotiations of the EU’s 4th Anti-Money Laundering Directive. Beneficial ownership information would provide authorities, journalists, and civil society with information on who actually owns or profits from a company. The European Parliament already approved such registers overwhelmingly in March, with a vote of 643-30. 

Juncker’s response to the journalists seemed to give a grim outlook on the possibility of publicly accessible registers, as Nick Mathiason of the Bureau of Investigative Journalism writes:

Jean-Claude Juncker appears this morning to have distanced himself from making registers setting out the true owners of companies and other legal entities accessible to journalists and NGOs in a letter sent to the Bureau of Investigative Journalism at City University in London .

The EU Commission president’s stance will spark deep unease from anti-corruption campaigners.

In the letter to the Bureau, the EU Commission president wrote: “In the ongoing talks on the Commission proposals our negotiators support provisions of enhanced transparency and call for systems of access to beneficial ownership information including clarification on the possibility of access by third parties who demonstrate a justified legitimate interest.”

The statement will be seen as falling short on an outright endorsement that registers will be open to all.

The concerned parties negotiating will hold another “trilogue” meeting next week, and it’s possible that a compromise text will be agreed to then. We only hope that the compromise includes a space for publicly accessible registers on the real owners of companies.


Image used under Creative Commons licensing / Flickr User European People’s Party

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Investigative Journalists Take a Stand in the Name of Public Interest http://www.financialtransparency.org/2014/12/10/investigative-journalists-take-a-stand-in-the-name-of-public-interest/ http://www.financialtransparency.org/2014/12/10/investigative-journalists-take-a-stand-in-the-name-of-public-interest/#comments Wed, 10 Dec 2014 17:11:02 +0000 http://www.financialtransparency.org/?p=25664 International Anti-Corruption Day, more than 40 investigative journalists from all over the world signed a letter urging Jean Claude Juncker, President of the European Commission, and other legislators to finish what the European Parliament started in March: the creation of public registers of company ownership information. The proposed reform, currently being debated under a new anti-money laundering directive, would create registers to collect information on the real, human owner behind every company operating in the EU. Right now, it's all too easy to set up an anonymous company and use it for money laundering, embezzlement, arms trading, or tax evasion. These activities, with help from the secrecy shell companies provide, contribute to the nearly US$1 trillion that leaves developing countries in illicit financial flows every year.]]> Fittingly released on International Anti-Corruption Day, 45 investigative journalists from 23 countries around the world signed a letter urging Jean Claude Juncker, President of the European Commission, to finish what the European Parliament started in March: the creation of public registers of company ownership information.

The proposed reform, currently being debated under a new anti-money laundering directive, would create registers to collect information on the real, human owner behind every company operating in the EU. Right now, it’s all too easy to set up an anonymous company and use it for money laundering, embezzlement, arms trading, or tax evasion. These activities, with help from the secrecy shell companies provide, contribute to the nearly US$1 trillion that leaves developing countries in illicit financial flows every year. 

The letter was organized by the Illicit Finance Journalism Programme, a group which aims to increase the quantity and quality of stories concerning illicit finance and corruption. The signatories argue that public registers would allow journalists and NGOs to track down corrupt money that’s entering the financial system.

From the letter:

Investigative journalists seeking to challenge corruption rely on the courage of whistleblowers. But equally, we need access to timely information on how companies and trusts are used to funnel corrupt money through the European financial system.

The EU Anti Money Laundering Directive offers an opportunity to ensure that information on the ownership of companies and trusts is available to the public, allowing journalists, NGOs and indeed anyone to monitor the links between suspected criminals and their use of these currently secretive legal structures.

It’s no coincidence that the letter, which was drafted on Friday, gathered more than 40 signatures by early Monday morning. The speed with which journalists signed up is yet another sign of the growing consensus that there’s a need for more public interest journalism.

Read the full letter here.

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It’s Anti-Corruption Day, and here’s why that’s important http://www.financialtransparency.org/2014/12/09/its-anti-corruption-day-and-heres-why-thats-important/ http://www.financialtransparency.org/2014/12/09/its-anti-corruption-day-and-heres-why-thats-important/#comments Tue, 09 Dec 2014 17:32:04 +0000 http://www.financialtransparency.org/?p=25654 Today is International Anti-Corruption Day, which should serve as a day to remind the world why it’s important to speak out against corruption.

Corruption can take many forms. Whether it’s a politician funneling state funds into bank accounts in offshore tax havens, or a multinational corporation skirting their tax responsibilities in a developing country, one thing is clear: corruption stifles development and hinders society. Often, these corrupt acts are facilitated by a lack of transparency in our financial system. From being unable to identify the real owner behind a company to not having access to country by country financial information of corporations, financial secrecy is at the heart of corruption. A World Bank report found that anonymous shell companies were used in 70% of grand corruption cases of the past 30 years.

Feel free to join in the global chorus on Twitter and Facebook by following the hashtags #breakthechain and #anticorruptionday.

Here are just a few highlights from Twitter:

 

 

 

There are many ways to make your voice heard, and one way is through music. This year, Corruption Watch teamed up with South African recording artist Fiesta Black to create a song dedicated to exposing those who abuse their positions of power.

You can listen here:

Singing out against corruption has been going on for years, so I’ll leave you with a song from Lapiro de Mbanga, the late Cameroonian musician who was put in prison for singing songs against President Paul Biya and the corruption that finds Cameroon ranked as the 136th out of 176 countries in Transparency International’s 2014 Corruption Perceptions Index.

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