When a country can’t meet people’s needs, they may seek survival and opportunities elsewhere and through other means. country can’t meet people’s needs, they may seek survival and opportunities elsewhere and through other means. The economic challenges that illicit flows create are also contributing to pressing security and justice problems in richer countries. Transnational crime is a $1.6 trillion to $2.2 trillion annual global business, which not only supplies drugs, guns, and other illegal goods in developed countries but contributes to violent conflicts and a lack of legal economic opportunities in poorer countries. Pirates in the waters off Somalia and West Africa have been driven in part by a loss of traditional fishing industries due to illegal fishing and pollution in
their territorial waters by foreign vessels. Refugees seeking asylum and illegal immigration are high on the agenda of richer countries, and illicit financial flows are a factor in the conflicts and economic deprivation they’re fleeing. Every country has a role to play in curtailing these extremely damaging illicit financial flows, especially members of the G20. A key step is to end the system of legal anonymous companies, which has been a factor in every type of illicit financial activity, from terrorist financing to tax evasion. The solution is for governments to require that companies register the real names of the owners (i.e. “beneficial ownership” – the natural
persons who own, control, or benefit from the legal entity), when the company is formed and whenever the ownership changes. Why would any country want it to remain legal for people to move trillions of dollars with anonymity? Governments should also continue to work towards the automatic mutual exchange of tax information to crack down on fraudulent tax and asset declarations. Customs agencies can quite easily begin to make significant progress on curtailing trade misinvoicing by using trade data and systems such as GFTrade™ to monitor transactions for high risks of under – and over-valuation of imports and exports, before the goods are released. The world agreed to make curtailing illicit financial flows a priority for the Sustainable Development Goals. Now it’s time for governments to follow those words with policies, support, and enforcement. ■ 21
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