The G20 agrees to cooperate over asset recovery and tracking down wanted foreign nationals implicated in financial crimes
The G20 released its statement on September 5, 2016, and a large part of it indicates that the leaders of the world are becoming concerned with financial crime, including money laundering, terrorist financing and tax evasion.
The financial crime agenda was expanded to address concerns of flights of capital, the abuse of the financial system to export and move illicit funds from one country to another and shadow banking.
Shadow banking concerns
The G20 leaders said that they will be monitoring shadow banking, flights of capital and ways in which individuals and entities use the banking system to move money internationally and will address the risks to the financial system that arise from those activities. One of the ways they committed to address flights of capital and the movement of illicit funds is through better sharing of tax information with the lead coming from China who is opening up its tax database for asset recovery the Statement said, to achieve tax transparency.
Beneficial ownership disclosure is “vital” to protecting the integrity of the financial system”
The G20 leaders focused on beneficial ownership concerns – a term that means when people make legal structures to obfuscate who controls private companies (the shareholders or controllers behind the shareholders). As noted by the G20, understanding beneficial ownership is “vital to protecting the integrity of the international financial system” and to preventing its abuse.
Money laundering harms people
The G20 recognized that corruption, money laundering and the illicit flow of money to other countries is inconsistent with the rule of law and has a detrimental effect on the fair allocation of public resources on people. They stated that corruption, money laundering and the illicit flow of funds hinders economic growth and affects the integrity of the financial system.
G20 to assist in asset recovery
The G20 countries said that they will each assist in asset recovery and in the pursuit of persons wanted for corruption. At the G20, China announced that is was setting up a Research Center on International Cooperation Regarding Persons Sought for Corruption and Asset Recovery in the G20 countries.
Denial of safe haven
The G20 also said it would continue its policy of “denial of safe haven” of people immigrating to countries with proceeds of crime. The G20 stated it would share information with border agencies to enforce the denial of a safe haven, and will work with judicial authorities as well and start to aggressively use extradition measures to remove corrupt persons so that they are subject to justice in their own countries. According to the G20, this is an urgent matter.
The G20 also agree to information-share about foreign nationals who are suspected of financial crimes with law enforcement agencies. The statement said that they now have a “zero tolerance against corruption, zero loopholes in its institutions and zero barriers in taking action”.
Corruption in P3 infrastructure deals
In addition, the G20 addressed for the first time, the financial crime risks that arise from the practice of asset management, where the private sector is charged under long-term contracts with the responsibility for managing assets that belong to the public (such as highways, airports and such). According to NGOs, asset management arrangements that are contracted for under P3 procurement processes are at a higher risk for corruption and money laundering on the part of the funds that manage the assets – they is because they tend to be politically exposed persons and sometimes have anti-competitive arrangements.
Correspondent banking reduction
Not all the statements from the G20 were consistent or made sense from a financial crime perspective. The G20 said they support the reduction in correspondent banking but that move would increase financial crime activities and reduce the oversight of US regulators over the entire financial system, resulting in fewer prosecutions of financial crime.