Today’s Top Stories from GFI – GFI Urges Obama, African Leaders to Prioritize Curbing Illicit Financial Flows at U.S.-Africa Sum

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GFI Urges Obama, African Leaders to Prioritize Curbing Illicit Financial Flows at U.S.-Africa Summit
GFI Press Release, August 4, 2014

Illicit Financial Flows Draining US$55.6bn Annually from Continent

U.S. Must Address Its Role as a Major Facilitator of Such Outflows

WASHINGTON, DC – As African leaders descend on Washington this week for the historic U.S.-africa Leaders Summit, Global Financial Integrity (GFI) called on the Obama Administration and Heads of State from across the continent to prioritize efforts to curtail illicit financial flows from Africa, which GFI estimates cost the continent roughly US$55.6 billion per year over the past decade.

“Illicit financial outflows are by far the most damaging economic problem facing Africa,” said GFI President Raymond Baker, who sits on the UN High Level Panel on Illicit Financial Flows from africa. “In 2011 alone, US$76.9 billion flowed illegally out of Africa. That’s nearly US$77 billion that could have been invested in local businesses, in healthcare, in education, or in infrastructure. It’s money that could have been used to help pull people out of poverty and save lives. This Summit provides an historic opportunity for the United States and for leaders across Africa to focus their efforts on curtailing this hemorrhage of illicit capital.”

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US-Africa Summit: Avenues of anonymity and illicit financial flows
The Africa Report, August 4, 2014

By Christian Freymeyer and Savior Mwambwa

It’s been more than 100 days since Boko Haram—the terrorist group wreaking havoc in northeast Nigeria—kidnapped over 200 schoolgirls. Unfortunately, the group looks like it has no sign of slowing down. In a cross-border attack last week, perhaps one of their highest profile abductions yet, the group kidnapped the wife of Amadou Ali, Cameroon’s Deputy Prime Minister.

Boko Haram, and African security in general, will certainly be high on the agenda of the US-Africa Summit, which launches Monday. Billed as the “first such event of its kind,” President Obama has invited 50 African heads of state to the White House.

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Glencore-Zambia Tax Evasion Row Shows European Investment Bank Needs to Reform
International Business Times, August 4, 2014

By Finbarr Bermingham

 An ongoing row regarding an almost decade-old loan in Zambia has raised real issues over Europe’s multilateral financial architecture.

The European Investment Bank, an EU member state-owned lender, has come under fire from a coalition of NGOs for failing to disclose the results of its own investigation into alleged tax evasion involving a mining project to which it lent $50m in February 2005.

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Illicit Financial Flows

Opaque to transparent: Myanmar and the implications of EITI
Mizzima (Myanmar), August 3, 2014

By Manny Maung

Myanmar became the 45th country to be granted candidate status with the global Extractive Industries Transparency Initiative in early July.

As a candidate country, Myanmar is required to publish accounts showing all payments the government receives from extractive industries. It will be required to submit to the Oslo-based EITI board within 18 months a report outlining all taxes and other payments made to the government by oil, gas and mining companies.

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CSOs Task Obama, African Govts on Transparency
THISDAY (Nigeria), August 3, 2014

By Abimbola Akosile

Ahead of the United States-African Leaders Summit taking place in Washington from today, US President Barack Obama and African leaders have been urged to ensure a level playing field that would ensure the continent’s development.

The call was contained an open letter addressed to President Obama, which was drafted by the African civil society leaders of Publish What You Pay (PWYP), a global coalition campaigning for an open and accountable gas, oil and mining sector, a copy of which was obtained by THISDAY.

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Money Laundering

Govt probes money laundering through HK banks
IndiaTV News, August 4, 2014

The Directorate of Revenue Intelligence (DRI) has launched a probe after it detected a unique modus operandi to launder money by some importers who submitted fake bills to get bank remittances in their foreign accounts mainly located in Hong Kong.

After months of probe, the DRI claimed that certain traders submitted bills of imports for consignments that never reached Indian shores resulting in loss worth crores of rupees to the exchequer, official sources said.

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Macau’s casinos get snake eyes and scrutiny
Market Watch, August 3, 2014

By Wang Duan, Dai Tian, Zhang Yuzhe and Yang Gang

Mainlanders looking to skirt the Chinese government’s strict currency controls for a little high-stakes gambling need not look far after reaching the city of Macau.

The Macau way-around, which relies on UnionPay debit cards and pawn shops, is one reason why authorities in recent months have been scrutinizing the freewheeling, sometimes-illegal financing that often goes hand-in-hand with casino gambling in this former Portuguese colony.

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HSBC is looking for sympathy after reporting a $12.3 billion profit
Quartz, August 4, 2014

By Jason Karaian

It’s hard to feel sorry for a company that just reported a $12.3 billion profit, but that seems to be what HSBC is going for in its latest earnings report. The British banking giant narrowly missed analyst expectations for its first-half results, reporting a 12% drop in pre-tax profit for the period.

Chairman Douglas Flint (pictured above) said the group’s results would have been better if not for the need to “invest significant time and resources” in meeting the “heightened and evolving expectations of our regulators.” Rulemakers are putting “unprecedented” pressure on the bank, which is distracting its staff from customer-facing work, he added. The bank, which employs 256,000 workers, has “extremely limited space capacity” to deal with the “increasingly fragmented, often extra-territorial, still evolving” rules, Flint said.

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Tax Evasion and Avoidance

Tax evasion reaches EGP 6bn in one month
Daily news Egypt, August 4, 2014

By Sara Aggour

Around 608 cases of tax evasion were recorded in on month, totalling some EGP 6bn, state-owned new agency MENA announced Monday. Evasion of commercial and professional activities contributed with over EGP 4.37bn to the total amount.

“A reform in the taxation system is needed,” said Magdy Toulba, an economic expert and chairman of Arabian House of Consultancy for Financial and Economic Investment.

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Transnational Crime and Terrorist Financing

Nigeria: Tobacco – Confronting Challenges of Smuggling and Illicit Trade
AllAfrica, August 4, 2014

By Ayo Ajayi

The world has long been awakened to the harsh reality of terrorism and criminal money laundering. In Nigeria, the Boko Haram insurgency has brought home the reality of terrorism with even more poignancy. Terrorism typically needs to be funded and globally, it has since been established that illicit trade in tobacco is one of the major avenues by which terrorism is funded. Since the dawn of terrorism, procuring finances sufficient to sustain terror operations has been a priority for the terrorists. The illicit sale of cigarettes and other commodities by terrorist groups and their supporters has become a crucial part of their funding activities.

However, one of the measures which anti-tobacco activists have been advocating to reduce tobacco consumption because of its widely-acknowledged harmful effects, is the raising of taxes payable by tobacco manufacturing companies. The argument is that once the tobacco producer is heavily taxed, it would be forced to raise the price of its cigarettes, which will now be beyond the financial capability of the ordinary consumers who would then be forced to either reduce their smoking expenditure or quit smoking totally.

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Global Financial Integrity (GFI) promotes national and multilateral policies, safeguards, and agreements aimed at curtailing the cross-border flow of illegal money. In putting forward solutions, facilitating strategic partnerships, and conducting groundbreaking research, GFI is leading the way in efforts to curtail illicit financial flows and enhance global development and security.

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