BENEFICIAL OWNERSHIP TRANSPARENCY IN AFRICA: THE STATE OF PLAY IN 2020

On 1 July, the Tax Justice Network published an article saying that, in 2015, in 30 African countries, capital flight averaged about two-third of GDP and exceeded their external debt. While illicit assets abroad are private, debt is a collective liability of current and future generations of Africans. It says that beneficial ownership registration was placed on the African agenda to address illicit financial flows in 2015, with the launch of report by the African Union and UN Economic Commission for Africa.  It says that a new study examines the progress being made towards beneficial ownership transparency in 17 African countries. It finds that 7 jurisdictions have introduced legislation requiring the registration of beneficial ownership information – Botswana, Egypt, Ghana, Kenya, Mauritius, the Seychelles and Tunisia. However, it notes that In 6 of the 17, bearer shares have not been immobilised. The article also notes that African countries participating in the voluntary Extractive Industries Transparency Initiative are required to introduce public registries for beneficial owners of mining, oil and gas companies. The study makes practical recommendations on how countries can implement beneficial ownership registration and improve the effectiveness of disclosure.

https://www.taxjustice.net/2020/07/01/beneficial-ownership-transparency-in-africa-the-state-of-play-in-2020/

The study is at –

https://www.taxjustice.net/wp-content/uploads/2020/06/2020-Beneficial-Ownership-Transparency-in-Africa.pdf

 

 

 

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OBJECTIVES FOR THE FATF DURING THE GERMAN PRESIDENCY 2020-2022

On 1 July, FATF issued a news release advising that during the German Plenary years, the FATF will prioritise work on –

  • Digital Transformation of AML/CFT;
  • Financing of ethnically or racially motivated terrorism;
  • Money laundering and migrant smuggling;
  • Environmental crime; and
  • Illicit arms trafficking

It also says that FATF will continue to deliver its core work of identifying risks, setting standards, evaluating, and holding countries to account for effective action.

http://www.fatf-gafi.org/media/fatf/documents/German-Presidency-Priorities.pdf

 

 

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THE RISE OF STRATEGIC CORRUPTION

This fascinating article in the July/August edition of Foreign Affairs discusses the transformation of corruption into an instrument of national strategy. It argues that, in recent years, a number of countries — China and Russia, in particular — have found ways to take the kind of corruption that was previously a mere feature of their own political systems and transform it into a weapon on the global stage. Countries have done this before, but never on the scale seen today. What had previously been side payments have become core instruments of national strategy, leveraged to gain specific policy outcomes and to condition the wider political environment in targeted countries. The article describes 3 kinds of corruption –

  • Bureaucratic corruption – the pervasive conversion of ordinary public service, backhanders to get permits, licences or services done or done quickly;
  • Grand corruption – when business leaders or major criminals (or oligarchs) directly pay off top government officials in exchange for favours or advantage; and
  • Strategic corruption – where corruption is used as a tool of a country’s strategies and policies.

The article argues that in bureaucratic and grand corruption, the payer and the payee are mainly just trying to get rich. In strategic corruption, by contrast, the greed is still there, for at least some of the players, but the corrupt inducements are wielded against a target country by foreigners as a part of their own country’s national strategy.  The article refers to the Ukraine scandal that resulted in impeachment of Trump being attempted, Russian and Chinese, Turkish and other attempts at, or examples of, apparent strategic corruption.

https://www.foreignaffairs.com/articles/united-states/2020-06-09/rise-strategic-corruption

 

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FACEBOOK’S FLAWED PLAN TO END ANTIQUITIES TRAFFICKING

On 1 July, an article in Foreign Affairs said that Facebook has announced that it had updated its community standards to include a ban on “content that attempts to buy, sell, trade, donate, gift or solicit historical artifacts”.  It is said that this comes in response to calls of alarm from archaeologists and terrorism experts over the illegal trade in looted Middle Eastern antiquities that has flourished on the platform in recent years. It is argued that Facebook has unknowingly helped make antiquities trafficking an increasingly important source of funding for terrorist groups. Facebook has said that it will remove from its platform any content that violates its new rules – but due to data privacy concerns, it does not intend to preserve any of the removed content. The article criticises this, saying that evidence (photos, for example) could thereby be lost, and saying that war crimes against cultural property are difficult to prosecute. It wasn’t until 2016 that the first case built around the destruction of cultural heritage

https://www.foreignaffairs.com/articles/middle-east/2020-07-01/facebooks-flawed-plan-end-antiquities-trafficking

 

 

 

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WIRECARD ‘LINK TO CASH LAUNDERING’ IN UK

On 1 July, KYC 360 carried news of a report from The Times claiming that senior employees from the Germany-based payment processor were linked to an opaque network of British companies associated with alleged money laundering. The report says that an analysis of corporate filings reveals the involvement of Wirecard staff in a network of hundreds of shell companies set up in Consett, County Durham, which were connected to pornography, gambling and dating websites.

https://www.thetimes.co.uk/article/wirecard-link-to-cash-laundering-lbpjz573r

 

 

 

 

 

 

 

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