The UN’s High-Level Panel on International Financial Accountability, Transparency and Integrity for Achieving the 2030 Agenda released its interim report.
A virtual launch event featured the heads of Pakistan, Norway, Nigeria, and others highlighting priority recommendations to fight illicit financial flows.
The report notes that the rapid digitalization of economic activity that has taken place amid the COVID-19 pandemic is sharpening existing challenges to financial integrity and accountability.
The UN’s High-Level Panel on International Financial Accountability, Transparency and Integrity for Achieving the 2030 Agenda (FACTI Panel) has released its interim report. UN officials and Heads of State and Government pressed the Panel to include their priority recommendations when issuing its final report in February 2021.
Launched on 24 September 2020, the interim report finds that corruption and financial crime divert resources meant for investment in sustainable development. This undermines the provision of basic services at the country level and threatens global efforts to achieve the 2030 Agenda. Meanwhile, the rapid digitalization of economic activity that has taken place amid the COVID-19 pandemic is sharpening existing challenges to financial integrity and accountability, the authors note.
Leaders called for stopping “this bleeding of the poorer countries” through illicit financial flows.
The interim report presents no “silver bullets or single measures that will enhance financial accountability, transparency and integrity,” but indicates likely areas of recommendations, which will be “technically feasible, politically viable, and have direct bearing on releasing resources” for the SDGs. Recommendations will be presented with a timeframe for implementation to identify whether the proposal is ready for immediate action, requires more time to formulate the response, or needs a longer time to achieve.
The 15-member FACTI Panel was launched in March 2020 by the then-President of the UN Economic and Social Council (ECOSOC), Mona Juul of Norway, and the then-President of the UN General Assembly (UNGA), Tijjani Muhammad-Bande of Nigeria.
In a statement during the virtual launch event for the interim report, current ECOSOC President Munir Akram (Pakistan) indicated that he will incorporate the Panel’s findings into ECOSOC’s official work in 2021, including the annual session of the Forum for Financing for Development Follow-up (FfD Forum).
Also addressing the launch event, current UNGA President Volkan Bozkir (Turkey) said the Assembly will convene a special session on corruption in 2021, and the FACTI Panel’s analysis and recommendations will contribute to the dialogue. Prime Minister of Norway Erna Solberg also said the FACTI Panel’s findings should be central to the UNGA special session against corruption.
High-level speakers focused on several elements in their statements during the launch, including that it is “nothing short of criminal” to allow illicit financial flows (IFFs) to continue during COVID-19, let alone in the best of times, in the view of Akram. Prime Minister of Pakistan Imran Khan lamented that one trillion dollars is taken out each year by “white-collar criminals.”
Speakers’ proposals to stop “this bleeding of the poorer countries” included:
- Strengthening ways to return stolen assets from developing countries, including the proceeds of corruption, bribery, and other crimes; the Prime Minister of Nigeria encouraged the FACTI Panel to explore the model set out in the Common African Position on Asset Recovery (CAPAR);
- Creating a global minimum corporate tax to end profit shifting by multinational corporations;
- Imposing criminal and financial penalties on tax haven institutions;
- In the digital economy, taxing revenues where they are generated;
- Creating a UN mechanism to coordinate and supervise the work of official and non-official bodies dealing with IFFs;
- Ensuring that the countries most affected by IFFs are included within the existing organizations devoted to this issue; and
- Build on progress already made by relevant UN and AU processes on IFFs, such as the UN Economic Commission on Africa’s (UNECA) high-level panel on IFFs (the ‘Mbeki report‘).
The African Group linked the FACTI Panel’s work with the six discussion groups under the Initiative on Financing for Development in the Era of COVID-19 and Beyond convened by Canada, Jamaica, and the UN Secretary-General. These discussion groups recently issued recommendations on addressing IFFs, including by eliminating base erosion and profit shifting, to ensure that all companies, including multinationals, pay taxes where economic activity occurs and value is created. The African Group said this recommendation should be included in the FACTI Panel’s final report.
The FACTI Panel is supported by an independent secretariat hosted by the UN Department of Economic and Social Affairs’ (DESA) Financing for Sustainable Development Office. [Publication: FACTI Panel Interim Report] [Launch event] [Presentation of interim report findings]