Today’s Stories from GFI: Heads of UN, World Bank, WHO explicitly reference Illicit Financial Flows as Part of Develeopment Solutions

Jay Owen Reforming Global Finance


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July 13, 2015

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New Program to Address Damage of IFFs by Supporting Developing
Governments in Fighting Trade Misinvoicing

Global Financial Integrity (Press Release), July 13, 2015

Global Financial Integrity (GFI) is pleased to announce the launch of a new program that seeks to assist developing
country governments with increasing domestic resource capture by curtailing trade misinvoicing, and continuing work to educate policy makers about the corrosive impact illicit financial flows have on developing economies.

Funded by a year-long US$1.7 million grant from the Norwegian Ministry of Foreign Affairs, GFI will
focus its advocacy efforts on key stakeholders in order to embed the illicit flows issue in the International Conference on Financing for Development (FfD) Outcome Document and in the Sustainable Development Goals (SDG) targets and indicators.  Further, 
GFI will
work directly with select developing country governments to substantially curtail trade misinvoicing (i.e. trade fraud) — the primary method used to move illicit funds out of developing countries — in order to increase the collection of related tax revenue
(i.e. domestic resource mobilization), which can then be used for development projects. 
GFI estimates
that in 2012 alone the global volume of trade misinvoicing was $730 billion.

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IMF Tells U.S. To Move Faster on Identifying Beneficial Owners

The Wall Street Journal (Blog), July 10, 2015

By Samuel Rubenfeld

Heather Lowe, general counsel and director of government affairs at Global Financial Integrity, a Washington, D.C.-based research and advocacy group, said:
“Perhaps if Treasury and the White House won’t change their approach based on civil society concerns, they will do so now that the IMF has called them out on it.”

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How Illicit Financial Flows Cramp Development in Nigeria

Fitila (Nigeria), July 10, 2015

By Abiola Afolabi

Illicit financial flows are simply money that is illegally earned, transferred or utilized. This money is smuggled or disguised out of the country of origin through tax evasion, trade Misinvoicing, and
figure alterations and generally do not return to the country of origin.

Report by the Global Financial Integrity suggests
that every year, roughly $1 trillion flows illegally out of developing and emerging economies due to crime, corruption, and tax evasion- more than these countries receive in foreign direct investment and foreign aid combined.

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Position Statement on Financing for Development Conference
13-16.7. Addis Ababa

Policy Forum Working Group & Tanzania Tax Justice Coalition (Tanzania), July 10, 2015

In February 2015 President Kikwete adopted the African Union High Level Panel (HLP) report on Illicit Financial Flows from Africa. Among the various commitments are robust regulations, increased resources,
capacity and transparency and curbing harmful tax incentives to foreign investors.The HLP report estimated that Sub-Saharan Africa loses more than 50 billion dollars annually (average of 2001-2012). This is more than the combined total of foreign direct investment
(FDI) and net official development assistance (ODA), which these economies received in the same period.

The budget proposal for 2015/2016 does not take into account the revenue losses that are caused by various factors such as illicit capital flight as well as tax evasion and avoidance. For example Global
Financial Integrity
 has estimated that Tanzania lost 2.5 billion euros in 2002-2011 only due to trade and transfer mispricing by multinational companies.

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Financing for Development

Billions to Trillions: Ideas in Action 

The World Bank, July 13, 2015

Speech Given by World Bank Group President Jim Yong Kim

I’d like to extend a warm welcome to our partners from the UN, the multilateral development banks, the private sector, and to the broader development community. I’m very pleased you’ve joined us today
for this discussion on moving from ideas to action for mobilizing the trillions of dollars we need for development. I’d also like to thank my MDB and IMF colleagues for their strong collaboration with us on this important agenda over the past year. This is
a true example of what we can achieve through partnership.

With the end of the Millennium Development Goals and the introduction of the Sustainable Development Goals comes an opportunity to make important changes in how we approach development. We’ll meet at
the UN in September, in a process led by UN Secretary General Ban Ki Moon, to finalize a vision for sustainable development that embraces economic, social and environmental priorities.

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UN chief hails key role of civil society in financing future
development agenda 

United Nations (UN) Press Centre, July 12, 2015

As Member States press on with efforts to reach agreement on a plan to secure the necessary financing for sustainable development, United Nations Secretary-General Ban Ki-moon today told civil society
organizations gathered in Addis Ababa that their role is vital in keeping governments accountable and ensuring that the voices of billions around the world are heard.

“Now, more than ever, the world needs your advocacy, expertise, and ingenuity,” Mr. Ban told the Global Civil Society Forum, held in the Ethiopian capital from 11 to 12 July. “You are the voice of the
people. You can count on the UN to make it heard, loud and clear.”

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WHO lays out plans for financing new global health goal:
to ensure healthy lives and promote well-being for all at all ages 

World Health Organization (WHO) Media Centre, July 10, 2015

WHO is urging countries to move towards universal health coverage and to scale up international investment in catalytic development funding. The call comes as world leaders travel to the Third UN Financing
for Development Conference in Addis Ababa to discuss ways to pay for the new Sustainable Development Goals, to be launched in New York in September 2015.

“The best way to assure meaningful progress towards the new global health goal is for countries to move closer to universal health coverage,” says Dr Margaret Chan, WHO Director-General.

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Poor Nations Push for UN Body to Cut Company Tax Avoidance

Bloomberg Business, July 13, 2015

By William Davidson

Developing nations and advocacy groups at a United Nations conference in Ethiopia are pushing for a new global body to tackle tax avoidance by companies, a move opposed by richer nations.

Responsibility for tax standards should be moved to the UN from the Organization for Economic Co-operation and Development, a group of 34 rich countries, according to a position paper endorsed by 142
civil-society groups. The new agency should be mandated to address issues including corporate-profit shifting, increasing transparency and tax and investment treaties, according to the paper, released in the Ethiopian capital, Addis Ababa, before the four-day

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Tax Evasion and Avoidance

Romanian PM charged with tax evasion and money laundering

Reuters, July 13, 2015

By Radu-Sorin Marinas

Romanian Prime Minister Victor Ponta was charged on Monday with forgery and serving as an accessory to tax evasion and money laundering, further tarnishing the image of the ex-communist state as it struggles
to shake off a reputation for corruption.

Prosecutors said they had named the 42-year-old prime minister as a defendant in a five-week long criminal investigation, and temporarily seized control of his property. He denies wrongdoing and says
the case is politically motivated.

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Money Laundering

Italian money laundering reports hit an all-time high

Fortune, July 13, 2015

Organized crime, corruption, and tax evasion exacerbated by economic slump

Reports of suspicious bank transactions in Italy jumped 10 percent to a record high last year as the pervasive problems of organized crime, corruption and tax evasion were exacerbated by a three-year
economic slump, the central bank said on Monday.

The financial downturn had given cash-rich mafia groups the opportunity to tighten their grip on the economy as, with banks reducing lending, the criminal networks boosted their investments in the real
economy, investigators have said.

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Global Financial Integrity (GFI) works to curtail illicit financial flows by producing groundbreaking research, promoting pragmatic policy solutions, and advising governments.

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