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Analysis

Illicit Finance Must Remain High on the Agenda as G20 Leaders Announce Pandemic Response Measures

Denisse Rudich, Director, G20 Research Group London

This is a G20 presidency of firsts: the first time the event has been held in a virtual format, the first summit dedicated to fighting a global pandemic, the first time that corruption has been elevated to ministerial level, and the first time that the global anti-money laundering and counter financing of terrorism (AML/CFT) standard setter has been invited to participate in the summit itself.

On the first day of the Riyadh Summit, G20 leaders discussed pandemic preparedness and response. G20 members have spent USD$21 billion to combat COVID-19 and have injected $11 trillion into the global economy. The G20 also adopted a Debt Service Suspension Initiative (DSSI), which released $14 billion in liquidity to allow indebted countries to fight the pandemic. Multilateral development banks are also planning to provided $75 billion to DSSI-eligible countries as part of a $230 billion commitment for emerging and low-income countries. There are astronomical amounts of public funds flowing through international financial systems.

The G20 leaders also spoke about the need for equitable, universal and fair distribution of COVID-19 medical supplies, including diagnostics equipment, medicines, treatments and vaccines. The Access to Pandemic Tools (APT) initiative has been launched. The COVAX Facility and Access to COVID-19 Tools (ACT) Accelerator is also operational but requires additional funding. These initiatives represent a global collaboration for the development, production and equitable access to COVID-19 tests, treatments and vaccines. Although there is a current financial shortfall of $5 billion, the aim is to get 2 billion vaccines out into the developing world by 2021.

German chancellor Angela Merkel stressed that "No one is safe until everyone is safe."

It is essential that the G20 works with its multilateral partners and at domestic levels to put in place financial and quality controls and mechanisms that promote transparency and accountability in public procurement and supplier distribution channels. It is also essential that the various anti-corruption measures discussed by the G20's Anti-Corruption Working Group are also adopted. This could go a long way to ensuring that the vast amounts of funds being distributed benefit society. And it is essential that G20 members work with their partners to prevent the laundering of vast quantities of assets and to guard against the harm caused by siphoning funds away from health services and by the sale of counterfeit vaccines or poor quality medical supplies. This could have devastating effects including further loss of human life.

At the summit, Marcus Pleyer, president of the Financial Action Task Force, told leaders:

The pandemic has spawned a rise in financial crime. We have seen new COVID-specific crime patterns, such as the counterfeiting of medical goods and scams to exploit economic stimulus measures. Businesses at risk of going bust can be exploited, with criminals taking them over or supplying cash to launder. Real estate, construction, as well as small and medium sized businesses in general, appear to be particularly vulnerable. And with rising numbers of people out of work, there is an increased chance of the vulnerable being used as money mules – for criminals to launder their illicit cash.

The COVID-19–triggered economic downturn and global crisis coupled with rampant public spending presents the perfect opportunity for criminals to profit. Illicit finance and anti-corruption initiatives must also remain high on the G20's agenda, including at next year's G20 summit hosted by Italy.

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Denisse Rudich is Director of the London office of the G7 and G20 Research Groups and founder of Rudich Advisory. She has held various positions in financial crime prevention, including head of anti-money laundering and counter-terrorist financing policy at RBS and as strategic advisor to Rabobank. She has served with the World Economic Forum's Global Coalition to Fight Financial Crime, set up the first global AML/CFT working group for the crypto industry, advises the Sentry, and acts as a technical expert to the Joint Working Group of InterVASP Messaging Standards.