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

alessandra.fontana@oecd.org