World Bank MD urges civil society to demand action against illicit financial flows

The G-20 leaders still haven't grasped the scale of the damage caused by illicit financial flows says the World Bank Managing Director, and she has called on civil society to take to the streets demanding action to protect developing countries from tax havens.

Speaking at a World Bank conference in Washington, Ngozi Ikonjo-Iweala said that whilst G-20 countries were anxious to combat tax evasion in their own economies the impact of illicit flows and tax evasion on developing countries continues to be ignored. Civil society, she said, needs to make more effort on this issue, including taking placards onto the streets demanding more comprehensive action by world leaders.

Welcoming delegates to the conference on the dynamics of illicit flows from developing countries, Dr Ikonjo-Iweala thanked the civil society delegates present for their pioneering work in this area, but called on them to increase their efforts to get the messages through to G-20 leaders. "Wave those placards" she urged.

Noting the progress made by G-20 in securing cooperation from some of the traditional secrecy jurisdictions, Dr Ikonjo-Iweala, a former Nigerian Finance Minister and a leading anti-corruption campaigner in that country, said that other jurisdictions are proving less cooperative. As a result, she said, "money is moving to countries that are harder to deal with, including countries in the Middle East, emerging markets and elsewhere." Dubai and Jersey were both cited as secrecy jurisdictions of especial concern.

Civil society activists representing Action Aid, lobal Financial Integrity, Global Witness, and Tax Justice Network are calling for more research into the scale of illicit financial flows from developing countries, and are promoting measures such as an international country-by-country reporting standard to increase the accounting transparency of multinational companies in an effort to stem such flows via trade mispricing. TJN's Richard Murphy told the conference that he found it entirely plausible that trade mispricing could be depriving poorer countries of up to US$160 billion each year, with secrecy jurisdictions playing a leading role in facilitating these losses.