I mentioned Global Financial Integrity a blog or two back. They are based in Washington DC partner the Tax Justice Network on out ‘Mapping the Faultlines’ project funded by the Ford Foundation which looks at secrecy jurisdictions the world over.

They also partner us in the Task Force for Financial Integrity and Economic Development. This is backed by the governments of Norway, Germany, France and other states.

We have a new publication out there, summarising our objectives. It has the same title as this blog and is available here.

The summary says:

We may be at a rare moment when the interests of rich and poor countries are synonymous.

At the heart of the current worldwide economic crisis is a lack of transparency in the global financial system. This is the end product of a half century of creating and expanding a shadow financial structure comprising tax havens, secrecy jurisdictions, disguised corporations, anonymous trust accounts, and fake foundations. Also included in this system are trade mispricing mechanisms, money laundering techniques, and gaps left in western laws that facilitate the movement of corrupt, criminal, and commercially tax evading money across borders. Some estimates suggest that as much as half of global trade and capital
movements pass through this shadow financial system.

The consequences of this murky structure and the money it moves are now clear:

• In developed countries, credit has dried up in large part due to the difficulty of appraising the quality of assets held by financial institutions that operate partially or wholly within this opaque system. This includes almost all major U.S. and European banks.

• In developing countries, an estimated $1 trillion a year of illicitly generated money is shifted abroad through this system, constituting the most damaging economic condition hurting the poor, undermining poverty alleviation and delaying sustainable growth.

The Task Force on Financial Integrity and Economic Development urges the G-20 to focus on substantially improving transparency in the global financial system. Thus far in discussions and commentaries, greater emphasis has been given to strengthening regulation within the existing structure. While some regulatory
improvements are certainly needed, we believe this emphasis is misguided. Far greater benefit can arise by significantly curtailing the shadow financial system that is clearly at the root of the economic crisis all nations are facing.

Our recommendations focus on five issues:

Priority 1: Curtailing Trade Mispricing
Priority 2: Country-by-Country Reporting
Priority 3: Confirmation of Beneficial Ownership
Priority 4: Automatic Exchange of Tax Information
Priority 5: Harmonization of Predicate Offenses

I’ll feature each of them over the next few days.