International anti-money-laundering standards should require all countries to create a centralized registry for beneficial ownership information on all legal entities to guaranty financial integrity, the High-Level Panel on International Financial Accountability, Transparency and Integrity (FACTI Panel) said on Thursday.
The proposal was part of the 14 recommendations contained in the Panel Report titled “Financial Integrity for Sustainable Development” to chart the way towards achieving the 2030 Agenda.
The registry would serve as a designated entity to collect and disseminate data on enforcement of money-laundering standards, including beneficial ownership information.
The recommendations, the Panel said, represent an ambitious set of measures to reform, redesign and revitalize the global architecture, to effectively foster financial integrity for sustainable development.
The FACTI Panel was convened on March 2, 2020 by the 74th President of United Nations General Assembly and the 75th President of the Economic and Social Council towards the overall efforts by member states towards realizing the 2030 Agenda for Sustainable Development.
The Panel was mandated to review current challenges and trends related to financial accountability, transparency and integrity, and to make evidence-based recommendations to close remaining gaps in the international system.
The FACTI Panel’s mandate was to assess the limitations of current systems, their impact on financing the SDGs, and recommend ways to address the challenges
The Panel is co-chaired by former Prime Minister of Niger, Ibrahim Mayaki, and former president of Lithuania, Dalia Grybauskaitė, with members including Annet Wanyana Oguttu, Benedicte Schilbred Fasmer, Bolaji Owasanoye.
Others include Heidemarie Wieczorek-Zeul, Irene Ovonji-Odida, José Antonio Ocampo, Karim Daher, Magdalena Sepúlveda, Manorma Soeknandan, Shahid Hafiz Kardar, Susan Rose-Ackerman, Tarisa Watanagase, Thomas Stelzer, Yu Yongding and Yury Fedotov.
The global finance system, the Panel noted, is currently skewed, as it is replete with gaps, loopholes and shortcomings in rules, with their implementation allowing tax abuses, corruption, and money laundering to flourish.
These illicit financial flows, it said, represent a double theft, as an expropriation of funds also robs the society billions of a better future.
Consequently, the Panel said it developed a blueprint to free the global economy from illicit financial practices ultimately aimed at ensuring sustainable development for all, everywhere.
“Our approach is driven by a unified aim: to foster a system of financial integrity for sustainable development. Creating financial integrity for sustainable development, and using the resources generated to finance the Sustainable Development Goals will constitute a double win,’ the Panel said in its report.
On accountability, the Panel said all countries should enact legislation providing for the widest possible range of legal tools to pursue cross-border financial crimes, while the international community should develop and agree on common global standards for settlements in cross-border corruption cases.
Also, it wants businesses hold accountable all executives, staff and board members who foster or tolerate illicit financial flows in the name of their businesses.
To allow for legitimacy, international tax norms, particularly tax-transparency standards, the High Panel said should be established through an open and inclusive legal instrument with universal participation; to that end, the international community should initiate a process for a UN Tax Convention.
On transparency, the Panel said the standards should encourage countries to make information public, improve tax transparency by having all private multinational entities publish accounting and financial information on a country-by-country basis.
Besides, to build on existing voluntary efforts, the Panel urged all countries to strengthen public procurement and contracting transparency processes, including transparency of emergency measures taken to respond to COVID-19.
Tax payers, especially multinational corporations, the Panel said should be made to pay their fair share of taxes, with the UN Tax Convention urged to provide for effective capital gains taxation. Similarly, taxation must be equitably applied on services delivered digitally based on their group global profit.
To combat tax competition, tax avoidance and tax evasion, the Panel said fairer rules and stronger incentives must be created starting with an agreement on a global minimum corporate tax, coupled with an impartial and fair mechanism to resolve international tax disputes, under the UN Tax Convention.
In resolving difficulties on international asset recovery and return, to strengthen compensation, the Panel called for the creation of a multilateral mediation mechanism to fairly assist countries, while escrow accounts, managed by regional development banks, should be used to manage frozen/seized assets until they can be legally returned.
For the enablers, the Panel wants governments to develop and agree on global standards/guidelines for financial, legal, accounting and other relevant professionals, with input of the international community; adapt to global standards for professionals into appropriate national regulation and supervision frameworks.
On the other hand, it wants non-state actors, particularly the international community, to develop minimum standards of protection for human right defenders, anti-corruption advocates, investigative journalists and whistle blowers, while states should consider incorporating these standards in a legally binding international instrument, and civil society should be included in international policy making forums in an effective and efficient manner.
For international cooperation, the Panel called for end information sharing in relation to information shared for tax purposes; enable free exchange of information at the national level as standard practice to combat all varieties of illicit flows; promote exchange of information internationally among law enforcement, customs and other authorities.
Also, international organizations must provide timely advice related to illicit financial flows (IFFs), so that procedures, norms and policies can be updated regularly; governments must dynamically adjust their national and international systems in response to new risks.
To ensure capacity building towards creating an international compact on implementing Financial Integrity for Sustainable Development to coordinate capacity building; extend existing capacity building that tackles tax abuse, corruption, money-laundering, financial crime and asset recovery, while the international community should finance the creation and maintenance of public goods to lessen the cost of implementing financial integrity commitments.
The Panel wants United Nations Office on Drugs and Crime (UNODC) to do research on anti-corruption, including in collaboration with other international organizations, to strengthen its capacity with the strategic aim of improving the effectiveness of capacity building and technical assistance.
To collect and disseminate national aggregate and detailed data about taxation and tax cooperation on a global basis, the Panel recommended the establishment of a Centre for Monitoring Taxing Rights; designation of an entity to collect and disseminate data about mutual legal assistance and asset recovery efforts.
On a regular basis, the Panel recommended and update on the United Nations Convention against Corruption (UNCAC) implementation review mechanism to improve comprehensiveness, inclusiveness, impartiality, transparency and especially monitoring as well as other peer review mechanisms to reduce duplication and increase efficiency.
Apart from the creation of a robust and coordinated national governance mechanisms that efficiently reinforces financial integrity for sustainable development, the Panel asked for the publication of national reviews evaluating their own performance.
for global governance, it underscored the establishment of an inclusive and legitimate global coordination mechanism at united nations economic and social council (ECOSOC) to address financial integrity on a systemic level; building up on existing structures, create an inclusive intergovernmental body on tax matters under the united nations.
To create the legal foundation for an inclusive intergovernmental body on money laundering, the Panel said the starting point should be with the existing FATF Plenary, while there should be a design mechanism to integrate the UNCAC COSP into the coordination body under the auspices of ECOSOC.
