While western companies may be towards the top, that is, least corrupt, in the anti-corruption campaign group Transparency International’s annual Corruption Perceptions Index (CPI), TI sees some backsliding at the top of the CPI table. It’s more than a symptom of the global crisis of corruption; top-scoring countries’ willingness to accept the status quo is also perpetuating corruption, TI complains.
Funds funnelled anonymously across borders were often used to buy hot property in countries like Australia and the UK, where real estate ownership – especially via opaque offshore companies – continues to be marred by secrecy.
Following the release of the Pandora Papers, TI renewed its call for public, central registers of company owners in all countries – a known antidote to the problem.
Such a register is now in place in the Netherlands, but legal entities were given a generous deadline of March 2022 to submit information on their real owners. To further increase the country’s resistance to dirty money, the Netherlands also needs to clamp down on its trust sector, which is known to have been abused by corrupt elites from abroad, and increase enforcement against Dutch companies implicated in foreign bribery, TI said.
Real estate agents and banks are meant to keep out illicit cash. But as scandal after scandal shows, they enable cross-border corruption. And yet they typically escape regulation, supervision and accountability, TI argue. In Switzerland, TI said, gatekeepers such as notaries and lawyers continue to operate without anti-money laundering obligations when setting up and managing shell companies.
In 2021, the Financial Market Supervisory Authority concluded its year-long investigation into anti-money laundering failings at the Swiss bank Julius Baer, noting that proving individual responsibility for bank managers remained a challenge. Later in the year, the bank admitted its role in the laundering of US$36 million in bribes in the 2015 FIFA corruption case.
In Ireland, legislation passed in 2021 aims to upgrade the country’s anti-money laundering framework through “a renewed focus on gatekeepers”. More is needed, said TI. The CPI ranks 180 countries and territories by their perceived levels of public sector corruption on a scale of zero (highly corrupt) to 100 (very clean). Ranked joint first on 88 are Denmark, Finland and New Zealand; the UK scores 78. Bottom are Somalia, Syria and South Sudan.
As for the European Union, member states continue to drag their feet on implementing EU anti-money laundering legislation, and on closing the loopholes that still remain in this important new law, TI complains. Members also need to get behind an ambitious proposal to establish a new EU anti-money laundering agency, the report adds. The explosive release of the Pandora Papers also served as a reminder that corporate secrecy enables oligarchs, human rights abusers and billionaires, allowing them to secretly move suspicious wealth offshore through luxury property purchases – including in France and Monaco, TI point out. The pressure group calls on EU countries to transpose the EU Whistleblowing directive, fully implement the EU Anti Money Laundering Directive, set up public beneficial ownership registers, and end the systemic weaknesses that are allowing cross-border corruption schemes to go undetected.
More generally, TI suggested that transnational corruption enables human rights abuses; a failure to address transnational corruption makes it much harder for societies in countries with high levels of corruption to hold power to account, trapping them in a vicious cycle, of corruption and oppression.
Delia Ferreira Rubio, Chair of Transparency International said: “Human rights are not simply a nice-to-have in the fight against corruption. Authoritarian approaches destroy independent checks and balances and make anti-corruption efforts dependent on the whims of an elite. Ensuring people can speak freely and work collectively to hold power to account is the only sustainable route to a corruption-free society.”
Visit https://www.transparency.org/en/cpi/2021.
