Nick Shaxson ■ UN asks IMF, World Bank, to study illicit financial flows

Eurodad's report highlighting the extent of official research into IFF

Eurodad’s 2009 report highlighting the extent of official research into IFF

Highlighting a powerful new(ish) study: the final report on illicit financial flows and human rights of the UN Independent Expert, Juan Pablo Bohoslavsky. It’s well worth reading the whole thing, but here are some of the top lines and just a few of the many important recommendations:

  • Illicit financial flows, including individual tax evasion and multinational tax avoidance, constitute a major threat to the progressive realisation of human rights.

  • States should require publication of the beneficial ownership of companies, trusts and foundations; should exchange information automatically on a multilateral basis, including without requiring reciprocity from lower income countries; and should require publication of multinationals’ country-by-country reporting
  • Human rights impacts caused by corporate tax abuse should form part of due diligence required by business actors and be addressed in national action plans on business and human rights.
  • The IMF and World Bank should publish estimates of the volume and composition of illicit financial flows on an annual basis to monitor progress in implementing target 16.4 of the Sustainable Development Goals on illicit financial flows; while the Bank of International Settlements should publish its data on international banking assets by country of origin and county of destination. This last point is a long-standing demand by civil society actors, as Eurodad’s 2009 summary of the state of official research into the issue (pictured) reminds us.

Particularly pleasing to us is the recognition of the need to complement volume estimates of illicit financial flows, with indicators tracking the risks and vulnerability in terms of bilateral relationships between jurisdictions:

91.        Progress in reducing illicit financial flows should be tracked within the Sustainable Development Goals framework by a second indicator monitoring policy efforts to curb illicit financial flows by countries of origin and destination. The Financial Secrecy Index could provide an inspiration.

This draws on the innovative vulnerability analysis undertaken originally for the African Union/Economic Commission for Africa panel on IFF out of Africa, chaired by Thabo Mbeki. 

The report also draws on an interesting background study by Esther Shubert, and adds to the growing momentum around the importance of tax justice for human rights.

This came out last month; somehow we haven’t blogged it until now. We should have.

More on our tax justice and human rights page.

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