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Analysis

G20 Rome: Overview of Illicit Finance and Corruption Initiatives

Denisse Rudich, Director, G20 Research Group London
November 4, 2021

G20 leaders made numerous commitments on illicit finance and corruption at this year's summit in Rome Italy on October 30-31, 2021, on the eve of the United Nations' COP26 in Glasgow. The G20 addressed environmental crime before moving on to anti-corruption and anti-money laundering initiatives. This article provides an overview of commitments made in the leaders' declaration.

Environmental Crime

In the area of environmental crime, leaders committed to take "concrete measures" to deliver on commitments made "to end illegal, unreported and unregulated fishing, and combat crimes that affect the environment such as illegal logging, illegal mining, illegal wildlife trade and illegal movement and disposal of waste and hazardous substances." Leaders further committed to ending overfishing. This is key in allowing them to pursue efforts "to ensure the conservation, protection and sustainable use of natural resources." Leaders further highlighted the synergies that exist in financial flows for climate, biodiversity and ecosystems. They committed to strengthening identified synergies, recognizing the significance of work taking place on nature-related financial disclosure to capitalize on "co-benefits." When this information becomes the global standard and more widely available, it will be a key source of information to identify and prosecute environmental crime.

Anti-corruption

On anti-corruption, leaders once again renewed their commitment to zero tolerance for corruption and adopted the 2022-2024 Anti-Corruption Action Plan. In an apparent effort to enhance transparency and promoting accountability, G20 members said they would "demonstrate concrete efforts" made during the time period covered by the action plan and would also share information on steps taken to criminalize foreign bribery, in line with article 16 of United Nations Convention Against Corruption and the enforcement of foreign bribery legislation. Leaders further indicated that they would attempt to get all G20 members to adhere to the Organisation for Economic Co-operation and Development's Anti-Bribery Convention. To make progress on international cooperation on anti-corruption, leaders were very receptive of progress made by the GlobE Network's (the Global Operational Network of Anti-Corruption Law Enforcement Authorities). The GlobE Network was created as part of the Riyadh Initiative during the first ever G20 anti-corruption ministerial meeting and launched following the UN General Assembly Special Session on Anti-Corruption held earlier this year.

Leaders further committed to:

• ensure that G20 members update local laws and regulations to comply with the obligation to criminalize bribery, including bribery of foreign public officials, and boost work to prevent, detect, investigate, prosecute and sanction domestic and foreign bribery more effectively
• strengthen public-private partnerships and engagement not only with the private sector but also with academia, civil society and the media
• promote the "important role and active participation" of these actors in the field of anti-corruption
• fight "new and sophisticated forms of corruption"
• deny safe haven to criminal assets and to perpetrators of corruption in line with local laws
• combat transnational corruption, and
• promoting a "culture of integrity" in the private sectors, with a focus on relations between the private and public sectors.

As a likely nod to the Pandora Papers, the largest data leak exposing offshore holdings of prominent persons and the political elite, the G20 pledged to adopt "legally appropriate measures" to improve beneficial ownership transparency of legal persons and arrangements, and real estate. This is the first time that the G20 leaders have referred to the development of a real estate ownership registry and clarified the need to improve transparency at both international and domestic levels, especially on transnational flows. They referred to the recommendation made by the Financial Action Task Force (FATF), which sets the standard for global anti-money laundering and counter-financing of terrorism (AML/CFT), on enhancing beneficial ownership transparency. G20 members further linked their ability to providing relevant authorities with "adequate, accurate and up-to-date information" to improved beneficial ownership transparency.

Leaders also endorsed the G20 High-Level Principles on Corruption related to Organized Crime, the G20 High-Level Principles on Tackling Corruption in Sport and the G20 High Level Principles and Combating Corruption in Emergencies. They pledged to adopt the G20 Anti-corruption Accountability Report drafted for this year's G20 summit. Leaders also welcomed the Compendium of Good Practices on Measurement of Corruption to improve measurements of corruption.

AML/CFT

In the field of AML/CFT, G20 leaders once again reaffirmed their "full support" for the FATF and the global network of FATF-style regional bodies (FSRBs). The G20 recognized that "effective implementation" of AML/CFT and Proliferation (CPF) measures is central to fostering confidence in financial markets, guaranteeing a sustainable recovery and defending the integrity of the international financial system. The G20 highlighted the "relevance of the risk-based approach" that underpins the FATF 49 Recommendations to make sure that cross-border payments are legitimate and also to promote financial inclusion. The risk-based approach essentially requires countries to identify risks and allocate resources to manage those specific risks in a manner that is relevant and appropriate to that country. Leaders further confirmed their support for enhancing the FATF's work on improving beneficial ownership transparency. Likely as a precursor to COP26, the G20 also called on countries to tackle the laundering of proceeds linked to environmental crime, asking countries to act on the FATF's recent report on Money Laundering from Environmental Crime. Lastly, G20 countries reaffirmed the commitments made by their finance ministers and central bank governors to strengthen the work of FSRBs. This is the first time that G20 leaders have mentioned proliferation financing in this context, in what appears to be an endorsement of the expansion of the FATF's remit.

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Denisse Rudich is director of the G20 and G7 Research Groups (London) and a financial crime prevention specialist in policy development, strategic advisory and risk management. She has experience in setting up global frameworks in the investment and wholesale banking sectors, advising regulators, government and emerging fintech/regtech firms, and supporting forensic investigations in both the public and private sectors. She is involved in several global initiatives aimed at building effectiveness and collaboration in the fight against financial crime, and is CEO of Rudich Advisory.