Alessandra Fontana, Governance Advisor, Development Cooperation Directorate 2nd Meeting of the Task Force on Charting Illicit Trade Paris, March 6th, 2014
• We are measuring policy and practice ‘effort’ by OECD countries in addressing illicit flows originating from the developing world.
• We are NOT saying anything about the RELATIVE importance of the various parts of the IFF phenomenon.
• Output: comparative report based on open source data, with recommendations.
Measuring OECD Responses to Illicit Financial Flows
• Innovative way to promote development
• Acknowledges that certain development challenges require action at home as well as through aid overseas
• Effective to boost development as it increases resources available
• Builds local capacity
Towards a new approach to development policy
International action on IFF
“We reiterate our commitment (…) in fighting money laundering (…) We commit to ensure that we meet FATF standards regarding the identification of the beneficial owners of companies and other legal arrangements.(…) The G20 has the potential to create momentum towards a culture of intolerance of corruption. We will redouble our efforts (…) by enhancing transparency and closing enforcement gaps.”
G20 Leaders' Declaration
September 6, 2013, St Petersburg
G20 action: • Tax agreements • AML rules • Beneficial ownership • Anti-Corruption efforts
“Developing countries must grapple with such challenges as tax base erosion and profit shifting (BEPS), transfer pricing and illicit financial flows which are further amplified by severe capacity constraints.”
Saint Petersburg
September 5, 2013 2013
Illicit Financial Flows and Development Assistance
All DAC Countries, ODA 2012 Total
USD 126.9 billion Public Finance Mgmt. Legal and Judicial Development Financial Policy
Anti-corruption institutions Rest
97%
3%
Money Laundering
Average OECD Score on all 40
FATF Recommendations
Beneficial Ownership
CDD
PEPs
Correspondent Banking
CDD by DNFBPs
Supervision of DNFBPs
Money Laundering 2 Approaches to rank countries
Tax evasion
Summary of Global Forum peer review determinations for OECD members
Source: OECD (2013), “Tax Transparency 2013 Report on Progress”, OECD, Paris; and published peer review reports.
Tax evasion Exchange of Information Agreements signed between OECD countries and developing countries, 2000-2013
Number of individuals and legal persons sanctioned or acquitted, 1999-2012
Transnational bribery
Source: Adapted from OECD
Working Group on Bribery: 2013
Annual Report, OECD, Paris.
Recovering Stolen Assets
• Comply – Continue to improve implementation of the international standards
(FATF Recommendations, Global Forum Standard,…)
• Promote – Use presence in international fora to raise awareness about this issue
and push for compliance
• Understand - research domestic risk related to IFF/ how a countries’ policies impact
IFF internationally ? - support international initiatives (by NGOs, multilateral
organizations…) • Support - government authorities beyond development agencies need to be
involved in capacity building in developing countries
What next?
THANK YOU