PM urges for reforms in international bodies dealing with illicit financial flows
Prime Minister Imran Khan Thursday said national and cross-border financial transactions should be regulated under a values-based system to address the menace of illicit flows. He underlined the importance of taking some concrete and quick actions for return of all foreign assets that are shown to be stolen.
Addressing the virtual launch event of the Final Report of the high-level panel on International Financial Accountability, Transparency and Integrity for achieving the 2030 Development Agenda (FACTI), the prime minister endorsed the three-point plan proposed by the panel – apply international values of honesty and integrity to all financial transactions, strengthen policy frameworks, and reform and reinforce the relevant institutions dealing with these illicit financial flows.
The prime minister said that these responses could form part of a global pact for financial integrity.
He further stated that policies on illicit flows must be implemented in a coordinated and coherent way by national and international institutions and bodies.
He continued that the international bodies dealing with tax matters, corruption and illicit financing should be inclusive and representative.
They should not be used as instruments of pressure and coercion against developing countries, the prime minister added. He said that the values-based system should be reflected in all national and international financial instruments, institutions and transactions – and particularly in those bodies which address illicit financial flows.
All such activities should conform to rules and standards that are compatible with, and contribute to sustainable development.
“A global forum, under the United Nations, should coordinate all bodies dealing with the technical, legal and political aspects of illicit financial flows. It should incorporate a mechanism to adjudicate and mediate disputes on issues relating to illicit financial flows,” he said and added that it is now time to act on the recommendations of the FACTI Panel.
Pakistan will be happy to join in proposing the adoption of the FACTI Panel Report by the United Nations Economic and Social Council and the General Assembly, he further stated.
The prime minister called for taking some quick concrete actions –a commitment by haven countries to immediately and unconditionally return all foreign assets that are shown to be stolen or whose legitimacy cannot be explained and the OECD’s proposal to freeze and return the unexplained assets of foreign politically-exposed persons is worthy of consideration.
He said that there is a need to initiate negotiations on the new international tax cooperation and anti-money laundering legal instruments, like the Convention on Corruption, adopting a common principles identified by the FACTI Panel that would apply to all financial transactions; and establish a UN coordination, adjudication and mediation mechanism on illicit financial flows.
The prime minister said that Pakistan will work actively with all like-minded countries to realise these vital objectives.
He said that the UN interim report confirmed that due to political and official corruption, as well as crime and tax evasion, trillions of dollars are taken out of developing countries each year and over $7 trillion stolen assets are parked in the financial haven countries.
He said the flight of such huge resources from the developing countries is a principal cause of their under-development, poverty, inequality, and political instability.
The prime minister stated that during the consideration of the interim report in September last year, he suggested several global policy actions including; (i) immediate return of stolen assets; (ii) penalties on the financial institutions, lawyers and accountants, and other “enablers” of corruption, crime and tax evasion; (iii) disclosure of the “beneficial ownership” of companies; (iv) a global minimum corporate tax as well as fair digital taxation, review and revision of unequal investment treaties and a coherent mechanism for monitoring illicit financial flows set up under the United Nations.
As the FACTI report stated, this is a systemic problem, embedded within the international financial architecture, therefore, it requires a systemic solution and cannot be resolved by piecemeal or cosmetic actions.
The magnitude of the illicit financial flows is staggering and if recovered and returned, these can have a transformational impact on the development prospects of the developing countries.