CEDAW chimes differently to ECJ ruling on human rights and financial transparency

With the European Court of Justice (ECJ) ruling ringing in our ears – invalidating public access to beneficial ownership registries – it now seems timely to elevate the recent concerns expressed by the CEDAW Committee (Commission on the Elimination of All Forms of Discrimination Against Women) in their Concluding Observations on Switzerland’s financial secrecy laws. The Financial Transparency Coalition documents how the ECJ ruling:
“reversed much of the progress [we] have made in a decade in the fight against corruption, economic and natural resource crimes, tax abuses and other forms of illicit financial flows across the world.”

The perverseness of the ruling illustrates the dangerous
environment in which the tax justice movement operates. Moreover, it perhaps illustrates the enormous chasm in understanding of the linkages between financial transparency and economic, social and cultural rights. The ruling places an emphasis on the right to private life, while it fails to consider the importance of public access to company ownership data for purposes of fighting corruption and tax abuses.

The ruling suggests deliberate indifference to the cross-border consequences of financial secrecy on the human rights, such as the foreign ownership of companies and trusts to hide vast amounts of wealth in tax havens like Switzerland. Even if this ruling by the ECJ doesn’t apply to Switzerland, it will make it less likely that the upcoming centralised beneficial ownership registry, which includes also foreign ownership of companies and trusts, are made publicly accessible by Switzerland.

The ruling represents a travesty and a pernicious retrogression. It reminds us that private wealth can, when it chooses, turn legal channels into a weapon to surmount the rights and interests of citizens.

Meanwhile and in parallel, seemingly ‘softer’ law, such as CEDAW, reiterated its concern in the lack of progress that Switzerland has made since 2016 and in addressing previous concluding observations
(CEDAW/C/CH/CO/4-5, para. 41 (a)) on Switzerland and the systemic financial secrecy and the threat to rights. The CEDAW Committee comes to this conclusion using evidence from our joint submission with Alliance-Sud and CESR. The Financial Secrecy Index 2022 also corroborates this view in ranking Switzerland number 2 at the top of the Index.

Last month CEDAW published its draft Concluding Observations on their October 2022 review of Switzerland including the recommendation:

“that the State party undertake independent, participatory and periodic impact assessments of the extraterritorial effects of its financial secrecy and corporate tax policies on women’s rights and substantive equality, ensuring that such assessments are conducted impartially, with public disclosure of the methodology and findings.” (CEDAW/C/CHE/CO/6., 2022. Para.22)

Financial secrecy has a profound impact on economic and social rights, and not only on the rights for women and girls. Financial secrecy corrupts democracies, and thus reduces the enjoyment of civil and political rights in a meaningful democratic dialogue. Also, the clandestine influence of wealth and the illicit flow of finance at the bidding of financial crime and wealthy elites, denies opportunities for citizens to determine progressive economic and social policies that work to address inequalities and provide public services for all such as free public education, health and decent housing.

The ECJ ruling resting “on a narrow interpretation of beneficial ownership” and CEDAW’s emphasising of Switzerland’s notoriety as proponents of financial secrecy, underline the retrogression of public scrutiny and government accountability. The ruling should also steel the tax justice, climate justice, human rights movements for an intense and unwavering drive for the establishment of a United Nations intergovernmental framework on tax with the now accepted remit to provide both the design and governance for international taxing rules, transparency and accountability. Such a convention should also address the question of how tax and financial transparency advance the enjoyment of human rights in a broader sense,  recognising the impact on economic, social and cultural rights.

We should hold dear ‘soft’ deliberations and recommendations of the UN Treaty Bodies such as CEDAW. They can and arguably should make bold linkages to the nascent UN framework on tax rules in their purpose to provide accountability for economic and social rights, and equality. The basis of well-used and well-regarded ‘softer’ UN instruments is a perfect platform to move towards a ‘hard’ framework that would require commitments to transparency and the genuinely inclusive negotiation of international tax rules.

Co-authored by Liz Nelson, Director, Tax Justice & Human Rights, Tax Justice Network and Dr Matti Kohonen, Executive Director, Financial Transparency Coalition.

See also UN committee hears evidence of harms of Swiss financial secrecy on women’s rights