By Tom Cardamone, May 28, 2014
A Quarterly Newsletter on the Work of Global Financial Integrity from January through May 2014
Global Financial Integrity is pleased to present GFI Engages, a quarterly newsletter created to highlight events at GFI and in the world of illicit financial flows. We look forward to keeping you updated on our research, advocacy, high level engagement, and media presence.
This year has been busy so far, with GFI staff traveling to six continents within the first three months alone. The following items represent just a fraction of what GFI has been up to, so make sure to check our new website for frequent updates.
Measurable Change in India
In late April, the Indian Directorate of Revenue Intelligence released a summary of its first two years of increased law enforcement activity targeted at cases of commercial fraud, including illicit financial flows through trade misinvoicing. Their early results have been remarkable: between March 2012 and March 2014, they detected $1.3 billion worth of commercial fraud, and collected $396 million in new revenue.
India is just beginning its effort to crack down on trade-related illicit financial flows, and should serve as an example of the potential that curtailing trade misinvoicing has for development. India began working in earnest to reduce illicit financial flows after a report by Global Financial Integrity showed the economy had lost $462 billion since 1948 due to illicit outflows. Following years of intense political debate and public outcry, the Indian Ministry of Finance declared trade misinvoicing its ‘top priority’ and began working with GFI and others to address it.
While the precise magnitude and consequences of illicit financial flows in African countries — and throughout the developing world — deserve further analysis, it is clear that such flows are wreaking havoc on the continent. Any sustainable approach to global development has to curtail illicit flows and the mechanisms facilitating them. Only then will we be able to mobilize domestic resources for long-term development.
European Vote Raises Pressure on White House & Congress to Follow Suit
EU Parliament Endorses Creation of Public Registries of Beneficial Ownership Information
WASHINGTON, DC – Global Financial Integrity (GFI) praised the European Parliament for voting today to crack down on anonymous shell companies, a major conduit for laundering the proceeds of crime, corruption, and tax evasion.
The European Parliament’s Economic and Monetary Affairs (ECON) Committee as well as the Civil Liberties, Justice, and Home Affairs (LIBE) Committee voted in favor of requiring public registries of beneficial ownership information for companies incorporated in the EU, as part of its revisions to the EU’s Anti-Money Laundering Directive (AMLD).
GFI Urges EU Parliament Legislators to Follow UK’s Lead, Ban Anonymous Shell Companies
Anonymous Shell Companies are a Major Conduit of Illegal Funds; Public Registries of Beneficial Ownership are the “Gold Standard” in Curbing Phantom Firm Abuse
WASHINGTON, DC – Global Financial Integrity (GFI) today urged members of the European Parliament to support the creation of public registries of corporate ownership information in the upcoming vote on key revisions to the European Union (EU) Anti-Money Laundering Directive (AMLD). The pressure comes as GFI revealed that nearly US$70 billion in illicit financial flows—the proceeds of crime, corruption, and tax evasion—flowed into or out of developing and emerging EU member-states in 2011.
WASHINGTON, DC – As the world commemorates International Anti-Corruption Day on Monday, December 9, 2013, Global Financial Integrity (GFI)—a Washington-based, non-profit research and advocacy organization—reviewed many of the most notable achievements, developments, and shortcomings in fighting corruption and illicit financial flows for 2013.
“2013 has proven to be a landmark year in terms of policy advancements to curtail corruption and illicit financial flows,” said GFI President Raymond Baker, a longtime authority on financial crime. “Years of hard work by policymakers, researchers, and advocates culminated in real, on-the-ground policy achievements that will directly impact the amount of money leaving developing countries. We saw a few setbacks, but overall the year was very encouraging.”
European Parliament Passes Landmark Transparency Provisions for Oil, Gas, Mining, and Logging Companies
Canadian PM Harper Announces Intent to Adopt Similar Policies for Canadian Firms
G8 Urged to Make Disclosure Global Norm at Next Week’s Summit; Expand Country-by-Country Reporting to Firms in All Sectors
WASHINGTON, DC – Global Financial Integrity (GFI) lauded the European Parliament today for adopting new transparency rules for all EU listed extractive industries companies as well as all large, privately held extractive industries companies incorporated in the EU. Announced informally by European leaders in April, the rules were officially adopted by the Parliament Wednesday in what GFI referred to as a major victory for anti-corruption proponents. Also on Wednesday, the Canadian government announced that it intended to move forward to enact similar rules, a move lauded by GFI, a Washington, DC-based research and advocacy organization.
GFI Urges Them to Include Developing Countries for Truly Global Policies
WASHINGTON, DC – Global Financial Integrity (GFI) commended the European Council—the group of heads of government for all twenty-seven countries in the European Union— for the leadership it demonstrated in its May 22nd meeting on critical issues of financial transparency. The minutes of that meeting (PDF) show the following commitments, commitments that take us a significant step closer to achieving GFI’s goals of curtailing illicit financial flows:
Governments of France, Germany, Italy, Spain, and the UK Agree to Automatically Exchange Tax Information Multilaterally
GFI Urges Rapid Expansion to Include Developing Countries in the Landmark Multilateral Convention
WASHINGTON, DC – Global Financial Integrity (GFI) applauded the governments of France, Germany, Italy, Spain, and the United Kingdom today for announcing that they will be launching the first ever multilateral system of automatic tax information exchange. The Washington, DC-based research and advocacy group hailed the news as a landmark moment for taxpayers and transparency advocates with enormous implications for global development.