U4 Anti-Corruption Resource Centre

This Anti-Corruption Helpdesk brief was produced in response to a query from a U4 Partner Agency. The U4 Helpdesk is operated by Transparency International in collaboration with the U4 Anti-Corruption Resource Centre based at the Chr. Michelsen Institute.

Query

What is the role of G20 / OECD DAC countries in combating illicit financial flows from developing countries at the international level and on the ground?

Note

This answer is also available in French.


Content

1.          Illicit financial flows: Introduction

2.          The role of G20 / OECD DAC countries in combating illicit financial flows

3.          The role of development agencies in combating illicit financial flows from aid recipient countries

4.          References

5.          Annex: Summary of resource flows compared to domestic resources

Summary

Illicit financial flows have pervasive effects on developing countries’ social and economic development. In many countries the volume of financial outflows exceeds the inflows of aid and foreign direct investment due to corruption, money laundering, tax evasion and avoidance.

The international community and particularly countries that are members of the G20 and the OECD Development Assistance Committee (DAC) have an important role to play. At the international level, global standards to identify and prevent cases of money laundering need to be strengthened and enforced, including rules to identify politically exposed persons and beneficial owners. The international community can also advance international standards related to tax evasion and avoidance, such as rules requiring multinational companies to report on their country of operation and tax authorities to automatically exchange information, while maintaining policy coherence. Increased enforcement of foreign bribery infractions and the freezing and repatriation of stolen assets may also help to send the message that corruption is not tolerated.

At the domestic level, donors can provide technical assistance and capacity building to developing countries. They are also in a good position to support civic organisations that hold governments to account and can fund further research on illicit financial flows in specific countries to help target their development assistance.

Authors

Maíra Martini, mmartini@transparency.org, Transparency International

Date

19/05/2014

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