Financial flows & crime

Political corruption on a grand scale relies on sophisticated techniques to disguise both the source and ultimate destination of the funds. The scale of such illicit financial flows is enormous – Global Financial Integrity  estimates that developing and emerging economies lost US$7.8 trillion in illicit financial flows from 2004 through 2013, with illicit outflows increasing at an average rate of 6.5 percent per year – nearly twice as fast as global GDP. The aftermath of the Arab Spring and the revolution in Ukraine showed that the EU is a favoured destination for the proceeds of corruption, highlighting the weaknesses of European anti-money laundering systems. At the same time, the EU also sees major outflows as a result of money-laundering, tax evasion and aggressive tax avoidance.

  • Corporate Accountability
  • Anti-money laundering
  • Open Data

About Corporate Accountability

From bribery, to undue influence and collusion, from fraud to money laundering, corruption in the private sector undermines the vitality of markets, the livelihoods of people and damages society as a whole. From ecological disasters to economic instability and human rights violations, private sector corruption has drastic consequences on our world. It erodes public confidence in institutions and deprives citizens of the benefits of economic growth.

The recent financial crisis is among the most glaring examples of a persistent integrity gap in private sector institutions. Corrupt and unethical behaviour in the financial industry includes not only episodes of fraud, misselling of financial products, market manipulation, conflicts of interest, insider trading and money laundering, but also behaviour that ignores the wider responsibility of banks towards depositors, tax payers and society at large. The most recent scandals demonstrate that regulatory and judicial efforts have not delivered the much-needed systemic and cultural changes required to restore trust.

In the European Union, corporate integrity standards have not yet reached a level that prevents corruption and undue influence, and the EU governance framework for corporate activities does not properly address demand and supply-side corruption.

However, the EU can help combat corruption in the private sector through stricter anti-corruption standards in trade policies, through more transparent and corrupt-free public procurement practices and through more substantial initiatives to promote best practice on corporate compliance or anti-bribery systems or, where necessary, changes to company law.

The EU can also better promote reporting of company anti-bribery programmes, company structures and their financial contribution to the countries where they operate (so called country-by-country reporting). This helps promote integrity standards by allowing citizens to hold them to account for their impact on the ground.

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Extractive Industries Transparency

Natural resources can bring considerable amounts of wealth to a country. However, an estimated 680 million people in resource-rich countries still live on less than 2 USD per day. For these people, wealth in natural resources has failed to deliver...

Tax Transparency

What is the problem? In the current international financial system, multinational companies are under no legal obligation to disclose this information regarding their activities, profits and the taxes they pay in each country of operation. Key...

Recent News

Press Release

EU tax haven blacklist needs transparency to succeed

Today, the adoption of the first EU blacklist of tax havens is a welcome step and a useful tool to incentivise tax havens to reform towards more transparency in their tax and financial systems, according to Transparency International EU. However,...

About Anti-money laundering

The EU relatively stable political and institutional environment makes it an attractive destination for laundering the proceeds of criminal activities. The High Level Panel on Illicit Financial Flows from Africa notes that a large share of illicit financial flows from Africa has a tendency to end up in bank accounts in developed countries. In particular, it estimates that 22.5% of the illicit money emanating from Nigeria’s oil sector flows in Spain, while 11.7% of illicit financial flows from Algerian oil and 23.6% of illicit financial flows from Cote d’Ivoire’s cocoa sector end up respectively in Italy and Germany.

Huge amounts of illicit flows are also leaving the EU. According to the European Commission, up to 1 trillion EUR could be lost every year by the EU due to tax fraud and evasion.

Not only does this constitute a serious threat to the EU financial stability and security, but also by diverting money from the public purse, it contributes to distorting public policy, eroding the role of the state as a public service provider and undermining citizens´ rights and trust in their institutions.

Efficient anti-money laundering rules are key to preventing, detecting and stopping illicit financial inflows to and outflows from the EU. The 4th Anti-Money Laundering Directive adopted in 2015 currently under revision is a first step towards introducing greater transparency in the EU financial system. Yet, it is not enough as revealed by the outbreak of the Panama Papers scandal in April 2016. Most urgently, the EU needs greater transparency over the ultimate owners of shell companies and trusts and proper enforcement of existing AML rules.




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Role of Professional Enablers in the Fight Against Money Laundering

Recent scandals, such as the Panama Papers, have highlighted systemic weaknesses in AML facilitating abuse of the financial system on a massive scale with severe consequences for societies, businesses and citizens around the world.  Professionals...

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About Open Data

Open data is a key requirement for achieving progress in the fight against corruption. For this to happen, data must be accessible, accurate, intelligible and meaningful. This is one of the reasons that the G20 has opted to adopt open-data principles to help promote public integrity and reduce corruption. This move reflects a growing trend toward the increased publication and availability of open data – data that is freely shareable, comparable, released and usable. The international Open Data Charter and specific national initiatives have attempted to create a common foundation to accelerate this process.

The EU has seen progress, manly driven by the EU Commission, in advancing the publication of information in open data format. This includes the launching of such platform as the EU Open Data Portal and DG Regional Policy’s portal on structural and investment funds. Despites these improvements more robust EU policies and practices need to be in place to maximise the use of open data to fight corruption.

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Clean Contracts

Through transparency and monitoring Integrity Pacts improve trust and accountability in public procurement.

European Corruption Observatory

The European Corruption Observatory is an online database of media articles about cases of corruption in the European Union. This online tool fosters awareness around transboundary corruption trends and allows citizens, journalists and civil society...

Tax Transparency

What is the problem? In the current international financial system, multinational companies are under no legal obligation to disclose this information regarding their activities, profits and the taxes they pay in each country of operation. Key...

Open Budgets

Openness and transparency can act as a disincentive to corruption in public spending. The current lack of open budget and expenditure data makes it impossible for citizens to get a comprehensive overview on how EU funds are being spent....

Integrity Watch

EU Integrity Watch is a central hub of online tools that allow citizens, journalists and civil society to monitor the integrity of decisions made by politicians in the EU

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DIGIWHIST Workshop: Big data on public procurement

Conference room, Rue d’Edimbourg 26, 1050 Ixelles, Brussels, 29 January 2018.  Register here or in the form below.  The main goal of the DIGIWHIST is the systematic collection, structuring, analysis, and broad dissemination of information on...

Slovenia Ranks Highest in ESIF Data Quality Index

Today, presents the European Structural Funds Data Quality Index. Slovenia ranks highest, based on high data quality and high accessibility and usability of its portal. Denmark comes in second, they provide outstanding data quality in...