The United Nations recently reported that during the pandemic illicit financial flows and tax avoidance led to the deterioration of the condition of the poor.
According to the UN report titled “Financial Integrity for Sustainable Development,” 2.7% of the global GDP is laundered annually
The UN’s Financial Accountability, Transparency and Integrity for Achieving the 2030 Agenda (Facti Panel) that prepared the report said that while corporations were looking for tax-free jurisdictions, this resulted to governments losing approximately $600 billion a year.
“A corrupt and failing financial system robs the poor and deprives the whole world of the resources needed to eradicate poverty, recover from Covid and tackle the climate crisis,” said Dalia Grybauskaitė, Facti co-chair and former Lithuania president.
The report said that six months into the pandemic, Transparency International found documented cases of corruption and malfeasance across 17 countries, involving public funds amounting to $1.1 billion—a sum that could purchase 50,000 ventilators.
The Facti Panel said inequality across the globe rose sharply due to the pandemic. While extreme poverty deteriorated by around 7%, the wealth of billionaires surged 27.5% at the peak of the crisis.
“Even if this result cannot be traced solely to illegal corruption and fraud, it is an alarming testament to the way the international financial system is presently skewed in favor of the wealthy, even during a pandemic,” the report stated.
The panel said recovering the annual loss to tax avoidance and evasion would be beneficial, especially in efforts to achieve the Sustainable Development Goals (SDGs).
“Closing loopholes that allow money laundering, corruption and tax abuse and stopping wrongdoing by bankers, accountants and lawyers are steps in transforming the global economy for the universal good,” Ibrahim Mayaki, Facti co-chair and former prime minister of Niger, said.
The report recommended greater transparency in company ownership and public spending as well as international cooperation to prosecute bribery, international efforts to create a minimum corporate tax and taxing of digital giants, as well as global governance of tax abuse and money-laundering.
The panel was convened by the 74th President of the UN General Assembly and the 75th President of the Economic and Social Council on March 2, 2020.
The panel reviews financial accountability, transparency and integrity, and makes evidence-based recommendations to close remaining gaps in the international system as a means to achieve the 2030 Agenda and the SDGs.