PRIME Minister Imran Khan on Thursday called upon the international community to take steps to counter illicit flows of money, saying the “stolen assets” of developing countries must be returned. Addressing a high-level panel on Financial Accountability, Transparency and Integrity (FACTI) on the sidelines of the ongoing United Nations General Assembly session, the Premier said the global community must take “decisive action” to stop “this bleeding of the poor and developing countries”.
While there is greater focus of the international community on use of money laundering for terrorist financing, the details provided by FACTI in its report are stunning and need to be given due consideration by all nations of the world to help check the menace of plundering of national resources by corrupt elements and transfer of money to safe havens. The report revealed that $1 trillion is taken out each year by white-collar criminals. This includes $20-40 billion in the form of bribes received by these corrupt white-collar criminals; $7 trillion in stolen assets parked in safe tax haven destinations while $500-600 billion is lost each year in tax avoidance by multinational companies. According to conservative estimates by the US State Department’s International Narcotics Control Strategy Report, Pakistan loses at least $10 billion every year due to money laundering. Apart from other forms of illegal transfer of money abroad, foreign currency, especially dollar, is also taken out of the country every day through launches to destinations like Dubai. The Prime Minister has rightly pointed out that his Government received mandate of the people in the elections to weed out corruption and some measures have also been taken towards that end but the goal of tackling the menace of financial bleeding is far away and cannot be accomplished until and unless there is sincere cooperation from other members of the international community especially those countries where such money is parked. It is regrettable that prompt action is taken against institutions in third world countries on suspicion of their involvement in money laundering but countries like Switzerland where banks receive billions of dollars in illegal deposits every year are non-committal and are not ready even to share data of suspected transactions. The strategy proposed by the Prime Minister during his address to the FACTI has the potential to help check the practice effectively. This includes suggestion for immediate return of the stolen assets of developing countries, including proceeds of corruption, bribery and other crimes, imposition of criminal and financial penalties on financial institutions which receive and utilize such money and assets, monitoring and accountability of the enablers of corruption and bribery such as accountants, lawyers and other intermediaries, making public of beneficial owners of foreign companies, discouraging multi-national companies from profit-shifting to low-tax jurisdictions for avoiding taxation and imposition of a global minimum corporate tax, taxing of revenues from digital transaction and establishment of a UN mechanism to coordinate and supervise the work of the various official and non-official bodies dealing with illicit financial flows to ensure coherence, consistency and equity in their work. There are reasons to believe that financial woes of countries like Pakistan can be addressed to a large extent if effective measures are in place to stop illegal transfer of money abroad. It is an irony that the country has to accept ignominious conditions of donors for securing loans worth millions of dollars but the country’s own money in excess of $10 billion is siphoned off every year. We have also been hearing from leadership of the successive Governments to take measures for bringing corruption money back but so far nothing has transpired. The lack of credible action encourages those involved in the practice and this also became evident from a report appearing in media in January this year that Federal Board of Revenue has traced out about 10,000 people who are involved in cash transactions running into trillions of rupees allegedly for the purpose of tax evasion and with possibility of involvement in money laundering. Mere identification is no solution until and unless the perpetrators of the white collar crimes are brought to the book and a combination of administrative and legal measures are taken to plug loopholes that allow misuse of the system.
