Illicit Financial Flows Draining US$55.6bn Annually from Continent
U.S. Must Address Its Role as a Major Facilitator of Such Outflows
WASHINGTON, DC – As African leaders descend on Washington this week for the historic U.S.-Africa Leaders Summit, Global Financial Integrity (GFI) called on the Obama Administration and Heads of State from across the continent to prioritize efforts to curtail illicit financial flows from Africa, which GFI estimates cost the continent roughly US$55.6 billion per year over the past decade.
Late last month, the U.S. government proudly announced a deal to resolve charges against BNP Paribas, France’s largest bank, for its prodigious violations of U.S. financial sanctions against Sudan, Iran, Cuba, and Burma. The bank agreed to pay a massive $8.9 billion fine and temporarily give up its ability to handle certain transactions in U.S. dollars. Although the case is yet another wholly lacking in individual prosecutions, many hailed (and some bemoaned) the punishment as unprecedentedly heavy—a strong statement of American intent to hold banks accountable for wrongdoing and a fair price to pay for a bank that would surely suffer grave damage to its reputation as well. But mere weeks later, it seems that the severity and persistence of BNP’s misconduct is all but forgotten, while the bank’s customers and investors have already returned to business as usual.
GFI’s Platform Issue Moving Forward to International Implementation
GFI Notes that Issues Still Need to Be Addressed, Warns that Developing Country Participation is Critical
WASHINGTON, DC – The Organization for Economic Cooperation and Development (OECD) today released a document encompassing standard agreements for the automatic exchange of financial information between countries as well as newly drafted guidance on implementing those agreements, in moves generally welcomed by Global Financial Integrity (GFI), a Washington, DC-based research and advocacy organization. In their press release, the OECD also asked for comments from the public by September 12th about how the framework for voluntary disclosure by taxpayers could be improved. The documents are expected to be formally adopted at the G20 Summit in Australia in November 2014, after approval by the G20 Finance Ministers at their September 20-21st meeting in Cairns.
U.S. Government Fails Again to Hold Individuals Accountable for Wanton Violations of U.S. Sanctions Law, Providing No Deterrent to Future Misconduct
Settlement Fits Same Mold as Previous Cases, Perpetuates “Too Big to Jail”
WASHINGTON, DC – Global Financial Integrity (GFI) expressed skepticism today that the settlement reached between the United States government and BNP Paribas SA would effectively punish the company for its systematic subversion of U.S. sanctions over a decade-long period or effectively deter similar conduct in the future.
U.S. Attorney General Eric Holder announced late on Monday that “between 2004 and 2012, BNP engaged in a complex and pervasive scheme to illegally move billions through the U.S. financial system on behalf of sanctioned entities” in Sudan, Iran, and Cuba, going “to elaborate lengths to conceal prohibited transactions, cover its tracks, and deceive U.S. authorities.” This pattern of behavior continued despite warnings by U.S. officials, opinions from reputable international law firms, and repeated statements from the bank’s own compliance officials that this conduct was illegal. According to the New York Department of Financial Services, the transactions involved totaled greater than $190 billion.
Council of the European Union Approves Text and Timetable for Directive, Including Crucial Measures on Beneficial Ownership Transparency.
WASHINGTON, DC – Global Financial Integrity (GFI) praised the Council of the European Union for continuing today the EU’s movement towards cracking down on anonymous companies, a major conduit for laundering the proceeds of crime, corruption, and tax evasion.
The Council, which is composed of government ministers from each EU member country, agreed on a revised text of changes to the EU’s Anti-Money Laundering Directive (AMLD), which will now return to the Parliament for a second reading and negotiations with the Council on final wording. The Council text retains the requirement, which the European Parliament overwhelmingly approved in March, that companies and trusts formed in every EU country disclose their “beneficial owners,” or the natural persons who ultimately own or control them, to a central authority.
“We strongly praise the Council for its movement to crack down on anonymous companies,” said GFI President Raymond Baker, a longtime authority on financial crime. “As our research notes, nearly $70 billion flowed illegally into or out of emerging EU economies in 2011. Anonymous companies are the number one tool for laundering the proceeds of crime, corruption, and tax evasion. Creating registries of the true, human, ‘beneficial’ owner of each company—as the Council endorsed today—is a common sense approach to curbing financial crime and the tremendous flow of illegal money.”
Tom Cardamone
Global Financial Integrity (GFI) joined several prominent civil society organizations on June 16, 2014 in signing an open letter to the UN’s Open Working Group on Sustainable Development Goals urging them to make Goal 16 a priority.
Ineffective governance and institutions hinder sustainable development goals. Furthermore, poor governance and leadership systems are often the root of sustainable development issues. Thus, the groups argue, progress with Goal 16 would reinforce all sustainable development goals.
Civil Society Experts Call on Delaware to Create Public Registry of Beneficial Ownership Information
WASHINGTON, DC – Global Financial Integrity (GFI) and Global Witness expressed disappointment that the Delaware House of Representatives passed two bills this evening that do little to stop criminals from using Delaware companies to launder their illicit proceeds.
The two pieces of legislation are House Bill 327 and House Bill 328, which would establish a chain of people that need to be consulted, in turn, in order to identify a person at a limited liability company or limited partnership who has a list of the entity’s legal owners. Legal owners may be other companies with hidden ownership or nominees, which are essentially front people for the real owner. The bills will now proceed to the State Senate for consideration.
“These bills are little more than window-dressing,” stated Stefanie Ostfeld, Senior Policy Advisor at Global Witness. “Anonymous companies lie at the heart of many of the world’s worst problems, and this legislation will do nothing to pull back the curtain on who owns and controls Delaware companies.”
E.J. Fagan, +1 202 293 0740 ext. 227
GFI Urges G7 Leaders to Push for an Illicit Financial Flows Goal in the Post-2015 Sustainable Development Agenda
GFI Calls for Implementation Assessments on Beneficial Ownership Commitment to Be Published by End of 2014
WASHINGTON, DC – G7 leaders meeting in Brussels reiterated their commitment to curtailing illicit financial flows stemming from crime, corruption, and tax evasion in a communiqué released today, as Global Financial Integrity (GFI) called on world leaders to push for an explicit illicit financial flows commitment in the post-2015 Sustainable Development Goals (SDGs).
