The COVID-19 pandemic has introduced a series of formidable stumbling blocks on top of pre-existing systemic challenges. It has compounded the inability of all States to generate domestic resources for vital investments for sustainable development. Illicit financial flows (IFFs) — from tax abuse, cross-border corruption, and transnational financial crime — drain resources from sustainable development.
Mobilization of public resources, internationally and domestically, can be enhanced, through curbing illicit financial flows.
A new approach: fostering financial integrity for sustainable development through a Global Pact
Values underpinning financial integrity: accountability, transparency, legitimacy and fairness
Policies to further support financial integrity for sustainable development
Institutions to support financial integrity for sustainable development
A NEW APPROACH:
FINANCIAL INTEGRITY FOR SUSTAINABLE DEVELOPMENT
“Financial integrity for sustainable development” is the idea that all economic and financial activities should be conducted in line with the content, and spirit, of legitimate financial rules and standards, which must be fully compatible with – and contribute to – sustainable development.
Achieving financial integrity for sustainable development requires greater transparency, enhanced accountability and more cooperation at the national, regional and global levels, with all people contributing.
A Global Pact for Financial Integrity for Sustainable Development
All countries agree to take comprehensive action to foster and strengthen financial integrity for sustainable development, and commit to using the proceeds released by this action to make additional investments in achieving the Sustainable Development Goals.
Values for integrity: accountability, transparency,
legitimacy and fairness
Laws must strengthen accountability, prevent malfeasance and tackle impunity on all sides of every transaction. Businesses should hold accountable those who foster illicit financial flows or turn a blind eye to them. Countries should ensure that all perpetrators and enablers are adequately sanctioned.
The international community must ensure that the norms they develop have broad legitimacy by making sure that they are framed and negotiated in an inclusive manner. That has not been the case for international tax norms. A UN Tax Convention with universal participation should be initiated.
Countries have varying standards of financial transparency, with some States’ policies allowing secrecy to flourish. Progress towards transparency is needed on beneficial ownership information, multinational corporate accounting, and public procurement and contracting.
There must be greater fairness, especially in tax cooperation and in the recovery of stolen assets of States. All taxpayers should pay their fair share, including a minimum global corporate income tax rate on profits. Fair and impartial mechanisms should be ensured to adjudicate disputes. A multilateral mediation mechanism can help resolve difficulties in asset recovery and return.
Strengthened policy frameworks to promote financial integrity
Those financial institutions, lawyers and accountants that enable illicit financial flows must be held accountable on an equivalent basis as those that commit the abuses. International standards are needed.
Civil society and the media play a critical role in building the support for financial integrity. They should be protected and civil society should be included in policy-making.
To address the lack of cooperation presently hampering efforts against cross-border corruption and tax abuse, governments must adopt unified approaches at national level built on shared information. States must also facilitate the global exchange of financial information to strengthen enforcement.
International rules and standards to promote financial integrity must adjust to changing behaviour and technologies. This will enable dynamic responses to new risks.
Capacity building must be strengthened to implement this agenda and respond to new risks and context-specific challenges. No country should be left behind.
Redesigning institutions to further financial integrity
States must commit to consistent data collection to monitor compliance nationally and internationally, including gender-disaggregated data.
All implementation review mechanisms related to financial integrity need to be updated to improve their comprehensiveness and monitoring mechanisms and to avoid duplication. The UNCAC implementation review especially needs updating to improve effectiveness.
Nationally, a whole-of-government approach should provide for inter-agency collaboration, coordinated reporting, and removal of duplicated or competing mandates. It needs consistent political support and needs to be integrated with broader development planning. Countries should publicly report on their progress.
Global governance needs improvement, with fully inclusive bodies for tax and the fight against money-laundering to match the one that exists for combatting corruption. There is room for regional progress. The United Nations can bring together technical, legal and political consideration in a single overarching global forum for coordination.