On October 5, 2021, Prime Minister Imran Khan will make comments at the World Leaders Summit Dialogue, which is being organized by the United Nations Conference on Trade and Development (UNCTAD) in Geneva. — Photo courtesy of Shahbaz Gill on Twitter.
Imran Khan, the Prime Minister of Pakistan, expressed his worry on Tuesday about the illegal transfer of $1 trillion from poor nations to tax havens, emphasizing the need of putting a stop to these outflows.
It was at the World Leaders Summit Dialogue, which was organized by the United Nations Conference on Trade and Development (UNCTAD) during its ongoing 15th Quadrennial Meeting, which is being hosted by Barbados when the prime minister made his comments.
It is estimated that $7 trillion is parked in tax havens and haven destinations, according to the FACTI panel (UN High-Level Panel on International Financial Accountability, Transparency, and Integrity).
In addition, the premier said that "this looting is taking place because of the corrupt governing class of the developing countries."
He referred to the situation as a "major catastrophe," which he warned would "only worsen" in the future years as a result of global warming.
While admitting that "sadly, the wealthier nations who can do anything about it [do] not [have] any motivation to do anything," Pakistani Prime Minister Imran Khan said that the only way this can be stopped is if the suggestions provided by the FACTI panel are followed.
Illicit outflows, according to the premier, are causing "crushing" for people in the developing world, not only because the money is being siphoned off to the developed world — where it could instead be spent on human development — but also because when the money leaves the country, it affects the local currency, devaluing it and causing inflation, which in turn leads to even greater poverty.
He said that economic migrants, who are now just a "trickle" in the developed world, would have an unforeseen impact in the coming years, even in the developed world.
"I implore you, Madam Secretary-General, to do all in your power to raise awareness of the massive injustice that is being perpetrated on the people of the developing countries, and to put an end to it."
Prime Minister Imran Khan has previously said that vaccine equity, debt relief, and climate financing should be prioritized as part of the global economic recovery from the catastrophic consequences of the COVID-19 epidemic.
The prime minister expressed his dissatisfaction with the inequitable distribution of vaccines and asked for a more fair distribution system. As a result, the prime minister campaigned for debt reduction until the conclusion of the epidemic, referring to his previous campaign for debt relief.
He also reiterated the urgent need for mobilization of and contribution by wealthier nations to climate financing, given the vulnerability and existential problems that Small Island Poor Countries (SIDCs) and other developing countries, including Pakistan, are confronted with.
The Prime Minister was invited to the Leaders Dialogue, which also included the Presidents of Kenya and Guyana, the Secretary-General of the United Nations Conference on Trade and Development, and the heads of other UN agencies. The theme of the dialogue was "Building a more prosperous development path: Matching the scale of the moment."
It is taking place against the background of enormous economic, public health, and social consequences caused and worsened by the COVID-19 pandemic from 4-7 October 2021 in Barbados, which will be virtually hosted by the island nation throughout the conference.
Recommendations of the FACTI panel
FACT published a study in February with 14 suggestions "to reform, restructure, and reinvigorate the global architecture so that it can successfully promote financial integrity for sustainable development," according to the report.
1 ACCOUNTABILITY
1A: All nations should adopt legislation that provides the broadest feasible range of legal instruments for prosecuting financial crimes that transcend international borders.
A single worldwide standard for settlements in cross-border corruption matters should be developed and agreed upon by the international community, as stated in point 1B.
One hundred and thirty-fourth (C): Businesses shall hold responsible any executives, employees, and board members who promote or allow illegal money flow in the name of their companies.
2 LEGITIMACY
It is essential that worldwide tax rules, especially in the area of tax transparency, be created via an open and inclusive legal document with universal involvement; to this purpose, the international community should begin the process of establishing a United Nations Tax Convention.
3: DISCLOSURE OF INFORMATION
Third, international anti-money laundering rules should mandate that all nations establish a centralized register to store beneficial ownership information on all legal entities. The guidelines should serve to encourage nations to make their information available to the general public.
Third, encourage all private multinational corporations to disclose accounting and financial information on a country-by-country basis to increase tax transparency.
The third recommendation is that all nations should build on current voluntary initiatives to increase the openness of public procurement and contracting, including the transparency of emergency measures implemented in response to COVID-19.
4 FAIRNESS
4A: Taxpayers, particularly multinational companies, should be held accountable for their due amount of taxation. The United Nations Tax Convention should include provisions for efficient capital gains taxes. Taxation on digitally provided services must be implemented equitably. This necessitates taxing multinational companies based on their whole worldwide earnings.
Fourth, make taxation more equitable by creating tougher regulations and greater incentives to fight tax competitiveness, avoidance, and evasion. This should begin with an agreement on a worldwide minimum corporation tax.
4C: Under the United Nations Tax Convention, establish an unbiased and equitable process for resolving international tax disputes.
5 FAIRNESS
A global mediation system to equitably help nations in resolving problems in foreign asset recovery and repatriation, as well as to enhance compensation is proposed in 5A.
5B: Escrow accounts, which should be maintained by regional development banks, should be utilized to handle frozen or confiscated assets until they can be lawfully restored to their rightful owners.
6 ENABLERS
A worldwide standard or set of rules for financial, legal, accounting, and other related professions should be developed and agreed upon by governments in consultation with members of the International Community (see 6A).
To implement global standards for professionals into suitable national regulatory and supervisory frameworks, governments should use the following strategy:
7 NON-STATE ENTITIES (Non-State Actors)
To ensure that human rights defenders, anti-corruption campaigners, investigative journalists, and whistle-blowers are adequately protected, the international community should establish basic protection criteria. These criteria should be included in a legally enforceable international document, and states should explore doing so.
7B: Civil society organizations should be involved in international policy-making forums in a timely and effective way to maximize their impact.
8 COOPERATION ON THE INTERNATIONAL LEVEL
Regarding information exchanged for tax reasons, eliminate the disparities in information sharing that now exist so that all nations may get the information.
To fight all types of illegal flows, it is necessary to enable the open sharing of information at the national level as a standard practice.
8C: Encourage the sharing of information between law enforcement, customs, and other agencies on a global scale.
9 DYNAMISM
Ninety-one percent of international organizations must offer timely guidance on IFFs to ensure that processes, standards, and policies are updated regularly.
As new dangers emerge, governments must constantly adapt their national and international institutions to mitigate them.
10 BUILDING CAPACITY
The establishment of an International Compact on Financial Integrity for Sustainable Development to coordinate capacity development is item number 10A on the list. Increase the scope of current capacity-building efforts aimed at combating tax evasion, corruption, money laundering, financial crime, and asset recovery.
10B: The international community shall fund the development and maintenance of public goods that may reduce the costs associated with fulfilling financial integrity obligations, as outlined in the United Nations Development Programme.
The tenth priority is to strengthen the capacity of the United Nations Office on Drugs and Crime (UNODC) to conduct anti-corruption research, including in collaboration with other international organizations, with the strategic goal of increasing the effectiveness of capacity building and technical assistance programs.
11 DATA (number eleven)
Creating a Center for Monitoring Taxing Rights to gather and distribute national aggregate and comprehensive data on taxes and tax cooperation on a worldwide scale is item 11A on the list.
11B: Establish a data collection and dissemination organization to gather and publish information regarding mutual legal aid and asset recovery activities.
11C: Establish a data collection and dissemination organization to collect and publish information on the enforcement of anti-money-laundering requirements, including beneficial ownership data.
12: REVIEW OF THE IMPLEMENTATION
12A: Improve the comprehensiveness, inclusivity, impartiality, openness, and, most importantly, monitoring of the United Nations Convention against Corruption (UNCAC) implementation review process.
To minimize redundancy and improve efficiency, UNCAC and other peer review procedures should be updated.
13 GOVERNANCE
Developing strong and coordinated national governance systems that effectively reinforce financial integrity for sustainable development is a top priority for governments, as is publishing national assessments of their own performance.
14 GOVERNANCE AT THE GLOBAL LEVEL
14A: Establish a worldwide coordination framework at the United Nations Economic and Social Council (ECOSOC) that is inclusive and legal to address financial integrity on a systemic level.
In addition to current institutions, a comprehensive international body on tax issues under the auspices of the United Nations should be established.
Initiate the process of establishing the legal basis for an inclusive international body on money laundering, beginning with the current FATF Plenary.
14D: Develop a framework for integrating the UNCAC COSP into the coordinating body under the auspices of the Economic and Social Council (ECOSOC).
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