Credit: United Nations Office on Drugs and Crime (UNODC)
UNITED NATIONS, Feb.26 (IPS) – A sign outside a laundry in New York read the frivolous slogan: “We wash dirty clothes, not dirty money.”
And a 2019 film titled Laundromat, based on a book Secrecy World by Pulitzer Prize-winning author Jake Bernstein, revealed the Byzantine world of money laundering.
This is the insidiously darker side of the world’s financial system – with millions of dollars in illicit profits finding safety in offshore banks – a crime committed worldwide, says a high-level body on international financial responsibility, transparency and integrity for reaching the agenda 2030 (FACTI).
Ibrahim Mayaki, co-chair of FACTI and former Prime Minister of Niger, points out that closing the loopholes that allow money laundering, corruption and tax abuse and stopping wrongdoing by bankers, accountants and lawyers is taking steps to transform the world economy for that Common good are.
In a report published on February 25, the UN body asked governments to agree to one Global Compact for Financial Integrity for Sustainable Development.
The panel, composed of former world leaders, central bank governors, business and civil society leaders, and academics, states that up to 2.7 percent of global gross domestic product (GDP) is laundered annually, while companies looking for tax-free jurisdictions Governments cost up to $ 600 billion a year.
At a time when billionaires’ wealth rose 27.5 percent, despite 131 million people being pushed into poverty by COVID-19, a tenth of world wealth could be hidden in offshore financial assets, according to the report prevented their fair from collecting proportion of taxes.
For example, regaining the annual loss through tax avoidance and tax evasion in Bangladesh would allow the country to expand its social safety net to 9 million elderly people. 38,000 classrooms could be paid for in Chad, and 8,000 wind turbines could be built in Germany, according to the report.
Professor Kunal Sen, Director of the United Nations World Institute for Development Economics Research (UNU-WIDER), told IPS: “At a time when tax revenues in developing countries are falling sharply due to the economic crisis caused by the pandemic, it is essential To find solutions to the large treasury losses due to illegal financial flows. ”
This is a key development challenge as the delivery of important public services such as education, health care and infrastructure depends on states being able to spend money, he stressed.
“Global coordination of tax policy, preferably led by the G7 countries (the developed world), which limits tax evasion and money laundering, is the order of the day,” he said.
James A. Paul, former executive director of the Global Policy Forum, told IPS that the new report from the United Nations high-level body is certainly welcome, but there is reason to wonder where it will take us.
“It offers a devastating analysis of the corrupt global financial system and how financiers are undermining welfare, fairness and legitimacy.”
The report argues that the architecture and rules of the system make sustainable development (and the United Nations 17 Sustainable Development Goals) difficult, if not impossible.
“Those who have been critical of the global financial system over the past few decades will not disagree, but they will find little that is really new here,” said Paul. Author of “Of Foxes and Chickens” – Ligarchy and global power in the UN Security Council.
He also noted that “it has long been clear that the world’s richest families and nations are the main beneficiaries of this system, that they have a hammer on politics and that they have no intention of changing things in any fundamental way”.
In particular, the national leaders of this global corruption mafia are nationals of the United States and the United Kingdom, whose financial institutions and oligarchies are the most powerful in the world, he added.
“They have ruled the global financial system for a long time and are determined to promote (despite declarations to the contrary) against reforms that would increase” fairness “,” transparency “and the other good things of the high-level body,” said Paul.
This brings us to the dilemma of the United Nations – and its ability to analyze and solve the world’s most fundamental problems. ”
However, he said the Presidents of the United Nations General Assembly and the Economic and Social Council should be congratulated on setting up this body and reminding us once again how the global oligarchy practices corruption at breathtaking and devastating levels.
However, the report’s authors cannot go far enough. That’s no surprise.
“Because we need something more fundamental – nothing less than a roadmap to a global democratic order that is freed from the grip of the financial oligarchy and finally guided by the needs and will of the people themselves … UN and its ability to address the most fundamental problems of the Analyze and solve the world “.
A former United Nations Secretary-General Kofi Annan, a Ghanaian citizen, once said that “some African leaders continue to hold billions of dollars in public money – even when roads crumble, health systems fail, school children have no books, desks , Teachers and phones don’t work. ”
Dr. Richard Ponzio, Senior Fellow and Director of the Global Governance, Justice, and Security Program at the Stimson Center in Washington, DC, told IPS that in addition to the erosion of national tax bases and the diversion of funds from critical public spending projects, tax abuse, corruption, and Money laundering helps fuel insecurity in today’s hyperconnected world economy by keeping criminal syndicates and international terrorists working to the detriment of global security and justice.
The recommended Global Compact on Financial Integrity for Sustainable Development should help expand the global reach of the Financial Action Task Force (merged in 1989 by the G7 and later by a few dozen countries) in coordinating global efforts to combat money laundering.
In addition, more (especially non-OECD) countries should be encouraged to participate in the OECD Declaration on the Automatic Exchange of Information (AEOI) on Tax Matters, which aims to increase bank transparency and reduce tax evasion worldwide.
The AEOI standard, which benefits both poor and rich nations, makes it harder for money launderers to hide their income and makes it easier for victims of tax evasion to recover funds.
In order for developing countries to reap the full benefits of this new transparency, developed countries and international institutions should recognize and help overcome the financial and capacity constraints that prevent less prosperous countries from participating in a multilateral regime for AEOI.
At the same time, developed and developing countries should promote the transparency of business registers to prevent money launderers from operating behind Shell companies.
Paul told IPS that both local and international NGOs have long pointed to the staggering sums of money being withdrawn from public treasuries by banks and finance managers, supported by corrupt politicians and systematically by journalists, professors and other apologists.
The honest research has shown, among other things, how taxes are avoided or evaded and how the richest individuals and companies pay almost nothing to support public projects and programs.
“This knowledge has deepened public distrust of governments and led us into the current crisis of global authoritarianism, but it has done little to change regulatory laws, improve tax collection, or reduce public corruption. If anything, the trend has moved in the opposite direction. ”
Ponzio said the United Nations Guiding Principles on Business and Human Rights and other corporate social responsibility standards can also help improve due diligence to prevent illicit financial flows (IFFs) in various economic sectors (including finance, accounting and legal) or decrease.
He said participatory budgeting and a human rights approach to budgetary surveillance can provide a glimpse at whether IFFs distract government spending from promoting the common good.
Armed with the right information, civil society organizations, the media and the general public can all play important roles in keeping states, corporations and intermediaries (lawyers and accountants) in compliance with their human rights obligations.
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