G20 Urged to Tackle Global Corruption

G20 Urged to Adopt Tools of Financial Pressure to Combat Grand Corruption and Kleptocracy

Experts From The Sentry Are Available for Analysis and Comment

November 14, 2022 (Bali / Washington, DC) — As the 2022 G20 summit begins tomorrow with the theme “Recover Together, Recover Stronger,” The Sentry urges the G20 member states to work together to tackle corruption and kleptocracy. The Sentry has outlined key policy recommendations that, if adopted, will enable the G20 to achieve real accountability for systemic corruption and create new leverage for peace, human rights, democracy, and good governance.

Denisse Rudich, Senior Advisor to The Sentry, said: “The Indonesian G20 presidency has identified stronger cooperation in fighting corruption as central to the collective capacity of countries to secure shared prosperity. We urge G20 countries to adopt tools of financial pressure, including network sanctions, anti-money laundering measures, and law enforcement action to make the fight against corruption more effective.”

John Prendergast, Co-Founder of The Sentry, said: “Given the current geopolitical context, there appears to be little that the G20 countries can agree on. It is essential, however, that the G20 continue to work on issues that impact the collective good. Corruption is such an issue, and The Sentry welcomes strengthening the fight against corruption as a key area of focus at this year’s summit in Bali and looks forward to progress made in this area.”

Justyna Gudzowska, Director of Illicit Finance Policy at The Sentry, said: “As G20 leaders meet, Russia’s war in Ukraine will undoubtedly dominate the conversation. But G20 countries should also address another conflict unfolding much closer to Bali, in Myanmar, where the junta’s recourse to violence, repression, and unsophisticated policies to seek to solidify its political control and kleptocratic interests have been catastrophic for the population. We urge the G20 to condemn the worsening crisis in Myanmar and to coordinate on a decisive and forceful response that should include the ratcheting up of financial tools of pressure against the junta and its enablers.”

The Sentry recommends that the G20 take the following actions:

1. Commit to using a wider range of tools of financial pressure to target systemic corruption. To effectively bring about systemic change and tackle corruption, consideration should be given to adopting a multifaceted approach to targeting kleptocracies that includes anti-money laundering (AML) measures, targeted network sanctions, and law enforcement action.
2. Signal an intention to adopt accountability measures, such anti-corruption sanctions regimes, in due course. G20 countries that have not yet done so should commit to enacting anti-corruption accountability measures, such as targeted sanctions, against the networks of elites and their enablers looting state coffers and stealing from their own people. They should also commit to closing loopholes as sanctioned entities and individuals take steps to evade these measures. Where possible, G20 countries should work together to increase pressure on corrupt actors by coordinating the issuance of sanctions and other accountability measures.
3. Pledge additional resources to help improve the effective implementation and monitoring of anti-money laundering and anti-corruption measures. This could include (1) a commitment to explore the coordinated issuance of country advisories and public notices detailing money laundering and corruption risks for kleptocracies that can assist in sharing vital information across the public and private sectors; (2) a pledge to bolster efforts to improve the supervision of banks and designated non-financial businesses and professions (DFNBPs) and to commit to impact-focused outcomes; (3) the creation of a task force to monitor G20 compliance with commitments on anti-corruption measures and show leadership in this space; and (4) the promotion of the adoption of technology and use of data to make the fight against corruption and financial crime more effective.
4. Commit to introducing additional transparency requirements—including beneficial ownership disclosures—for state-owned enterprises, military-owned enterprises, and their joint ventures. The United Nations Office on Drugs and Crime (UNODC) Oslo Statement on Corruption Involving Vast Quantities of Assets recommends that “state-owned or controlled enterprises should disclose their management structures, revenues, expenditures, and profits, and disclosure should be required [to be obtained] of the beneficial ownership of the supplier companies providing services or goods, and the value accrued by public officials or PEPs [politically exposed persons] through contracts to private companies during their tenure at State-owned or controlled enterprises, in line with national legislation” (R4). This requirement should be extended to military-owned enterprises. State-owned enterprises and military-owned enterprises should also be required to maintain and make publicly available their beneficial ownership information.
5. Commit to introducing legislation detailing civil recovery powers. This would allow law enforcement in countries to be able to freeze and seize assets and compel individuals to explain the source of wealth used to purchase those assets (similar to unexplained wealth orders in the United Kingdom). It would also allow the freezing of illicit funds in banks and financial institutions without the need for a criminal conviction, which can be a lengthy process.
6. Encourage the adoption of public private partnerships including collaboration with civil society to address anti-money laundering and countering the financing of terrorism (AML/CFT) and corruption. Innovative collaboration between the public and private sector is essential. The UNODC Oslo Statement on Corruption Involving Vast Quantities of Assets (VQA) recommends that “consideration should be given to developing formal and informal mechanisms and encouraging closer public-private sector collaboration to tackle corruption involving VQA, including by cooperating with civil society to complement the work of governments and the private sector” (R13).
7. Condemn the worsening crisis in Myanmar and coordinate on a decisive and forceful response. The junta’s recourse to violence, repression, and unsophisticated policies to solidify its political control and interests have been catastrophic for the people in Myanmar. The response should include the ratcheting up of financial tools of pressure against the junta and its enablers. Targeted network sanctions should be adopted and enforced by G20 governments to disrupt the ability of the military regime to earn foreign currency and to purchase items such as aircraft and jet fuel that are crucial to the brutal war it wages against its own people. G20 financial regulators should require that their financial institutions, as gatekeepers protecting the integrity of the international financial system, adopt enhanced due diligence on all Myanmar-related transactions, in line with the recommendations of the Financial Action Task Force (FATF). In parallel, G20 governments should coordinate with the Association of Southeast Asian Nations (ASEAN) and the United Nations (UN) to ensure that humanitarian aid is delivered to all beneficiaries in ways that do not benefit the junta.
8. Protect fragile economies against de-risking. De-risking remains a major concern for many countries, particularly those subject to greylisting or blacklisting by the FATF. The G20 should request that the FATF continue to address de-risking as an unintended consequence of AML/CFT measures so as to guard against wholesale de-risking and protect responsible business and employment practices. The G20 should task the FATF to work with civil society coalitions and financial institutions to develop guidance for both financial institutions and civil society to reduce harm in country. Additionally, G20 countries should call on financial institutions to prevent de-risking and ensure that humanitarian aid organizations and essential sectors of the economy can maintain unhindered access to the international financial system.

Click here to read The Sentry’s full statement.

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About The Sentry

(Short descriptor for press use: “The Sentry, an investigative organization that tracks corruption”)

The Sentry is an investigative and policy organization that seeks to disable multinational predatory networks that benefit from violent conflict, repression, and kleptocracy. Pull back the curtain on wars, mass atrocities, and other human rights abuses, and you’ll find grand corruption and unchecked greed. These tragedies persist because the perpetrators rarely face meaningful consequences. The Sentry aims to alter the warped incentive structures that continually undermine peace and good governance. Our investigations follow the money as it is laundered from war zones to financial centers around the world. We provide evidence and strategies for governments, banks, and law enforcement to hold the perpetrators and enablers of violence and corruption to account. These efforts provide new leverage for human rights, peace, and anti-corruption efforts.