Financial Integrity

Financial integrity describes the characteristics of a financial system that operates in a clean, transparent and accountable way. It is currently far too easy for corrupt individuals, including Politically Exposed Persons (individuals who hold or held a prominent public function, such as the head of state or government and their relatives and close associates) to hide their identity behind complex and secretive corporate structures, and transfer, launder and enjoy the proceeds of corrupt activity with impunity. This requires operating through a series of gate keepers such as lawyers, accountants, real estate agents, luxury goods providers and banks. Each have a role in preventing corrupt money from entering, flowing through and exiting the financial system, but each face challenges in doing so, undermining the integrity of the financial system. One major challenge facing the gatekeepers is accurately identifying the legitimacy of the origin of the funds because the identity of the individual who ultimately owns or controls the funds (the “beneficial owner”) is difficult to ascertain, most notably when they are hidden behind corporate structures in secrecy jurisdictions that collect and disclose very limited information.

Transparency International works to promote financial integrity by tackling money laundering (the process of concealing the origin, ownership or destination of illegally or dishonestly obtained money by hiding it within legitimate economic activities), identifying weaknesses in the rules and practices that govern the role of gate keepers, by promoting corporate ownership transparency to make it harder for corrupt individuals to enjoy impunity and in seeking the accountable return of stolen assets to countries of origin. Additionally, public country-by-country reporting by multinationals would serve to increase the overall transparency of the global financial system, reducing the incentives and opportunities for gatekeepers to create complex and secretive legal structures.