Were G20 corruption promises nothing more than a photo-op?

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Every year as much as US$2 trillion of dirty money is laundered through the global financial system, much of it by hiding the real owners of companies. Out of 400 bribery cases across more than 40 countries, the OECD found a quarter involved funnelling stolen cash through secret companies.

Last year the G20 made bold commitments to end the secrecy that allows the corrupt to hide their identity and shift dirty cash anonymously. Adopting historic principles on beneficial ownership, leaders declared the issue a ‘high priority’.

But how many actually took action once the camera’s stopped rolling? In a new report, we’ve assessed efforts across all 20 countries. For many it seems these promises may have been just for show.

G20: good at making promises, bad at keeping them

Overall performance is poor – 15 of the G20 countries have weak or average beneficial ownership transparency legal frameworks in place. Brazil, China and the United States were all found to have weak frameworks.

Two countries have yet to even adopt a legal definition of beneficial ownership.

Only the UK was found to have a very strong framework in place, largely due to recently adopted legislation giving immediate access to beneficial ownership information to law enforcement, banks and businesses with duties to check they are not handling stolen cash, such as real estate agents or luxury goods providers. As of next year, a central registry containing this information will be made public. But even the UK has big issues to deal with (see box on “The UK’s islands of secrecy”).

Beneficial ownership: What’s the big deal?

Corrupt individuals often hide from justice by moving dirty money through companies or trusts and disguising their connection to them by hiring “nominees” to sign the papers or setting up a firm somewhere that doesn’t require them to register their real name. The real, living corrupt person behind the company is the “beneficial owner”. And “beneficial ownership secrecy” has been involved in some of the biggest scandals of recent years:

The world looks to the G20 for leadership on political, economic and other important issues of the day. To avoid looking little more than a talk shop, they must keep their promises – including on tackling corruption.”

– Cobus de Swardt, Managing Director, Transparency International

G20 governments need to clamp down on the banks and businesses that help the corrupt…

… and they need to help banks, accountants, lawyers and businesses do their jobs

Fifteen countries rely on banks and businesses to gather beneficial ownership information, yet they don’t provide enough assistance to help them ensure that they are not complicit in corruption.

Verification of the data is extremely difficult and very few countries have a central registry system that allows for the collection and access to information that is required to ensure you are not helping the corrupt get away with it.

The UK’s islands of secrecy

The UK comes out top in our assessment, but this score only covers domestic law – it doesn’t look at standards for legal entities and trusts incorporated in British Overseas Territories and Crown Dependencies.

There, it’s a different story. In a number of the UK’s Overseas Territories – such as the British Virgin Islands and the Cayman Islands – legal systems create a veil of secrecy that obscures the identity of those who set up companies, usually for the benefit and use of non-residents.

These anonymous companies are a big obstacle to investigating money laundering. The UK needs to do more to ensure its overseas territories aren’t used as a safe haven for illicit and corrupt wealth.

Country / Territory - International   
Region - Global   
Language(s) - English   
Topic - Access to information   |   Accountability   |   Advocacy   |   Asset recovery   |   Civil society   |   Conventions   |   Governance   |   Intergovernmental bodies   |   Politics and government   |   Poverty and development   |   Transparency International   
Tags - OECD   |   G20   |   FIFA   |   Beneficial ownership   |   Viktor Yanukovych   |   Petrobras   

Press contact(s):

Chris Sanders
Manager, Media and Public Relations
+49 30 3438 20 666

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