G20 leaders, including Prime Minister Narendra Modi, on Sunday vowed to implement an anti-corruption action plan as part of a drive against the use of shell companies and trusts to engage in tax evasion and money laundering.
“We endorse the 2015-16 G20 Anti-Corruption plan that will support growth and resilience,” the leaders said in a communiqué released at the end of the two-day summit.
A set of principles for governments to follow that aims to make it easier to find out who is the beneficial owner of entities which are stated to facilitate hundreds of billions of dollars in illicit financial flows was unveiled by the G20 and contained in annexures to the communiqué.
“Our actions are building cooperation and networks, including to enhance mutual legal assistance, recovery of the proceeds of corruption and denial of safe haven to corrupt officials,” the communiqué said.
“We commit to improve the transparency of the public and private sectors, and of beneficial ownership by implementing the G20 High-Level Principles on Beneficial Ownership Transparency,” it said.
The anti-corruption plan seeks to ensure investments by corporates or individuals and the details of it are shared between developing and developed countries.
G20 host and Australia’s Prime Minister Tony Abbott said the initiative will be operational in the next three years.
“My understanding is, it starts now and we will build up over the next couple of years,” he told reporters.
“In 2014, corruption remains a very significant threat to global growth and financial stability,” said a G20 2014 -- Brisbane anti-Corruption update, adding that “there is a clear link between illicit financial flows and company structures.”
The G20 countries recognised that bribery imposes a heavy price on the public and private sectors with the annual cost of bribery estimated by the World Bank to be $1 trillion.
The principles state that countries should ensure that legal persons maintain beneficial-ownership information onshore and that information is adequate, accurate and current.
“Countries could implement this, for example, through central registries of beneficial ownership of legal persons or other appropriate mechanisms,” says the statement of principles.
It also calls on countries to ensure that information is shared between domestic and international agencies, including law-enforcement bodies.