Tax abuse, corruption, and money laundering are causing people around the world to be trapped in poverty, a report from the United Nations says.
The UN panel for International Financial Accountability, Transparency, and Integrity (FACTI) urges governments worldwide to enact legislation to change bank rules and the banking system to help end financial abuses.
In its report, Financial Integrity for Sustainable Development, the FACTI panel says stronger laws are needed to prevent corruption and money laundering, and that the bankers, lawyers, and accountants who enable financial crime must also face sanctions.
It says billionaires' wealth soared by 27.5 percent as 131 million people were pushed into poverty due to COVID-19. Additionally, up to 10 percent of the world's wealth could be hidden offshore at a time when governments are under financial pressure due to the pandemic.
"A corrupt and failing financial system robs the poor and deprives the whole world of the resources needed to eradicate poverty, recover from COVID and tackle the climate crisis," says Dalia Grybauskaite, FACTI co-chairperson and former president of Lithuania.
The panel says as much as 2.7 percent of the global GDP is laundered annually, while corporations shopping around for tax-free jurisdictions cost governments up to US$600 billion (NZ$800 billion) a year.
"Closing loopholes that allow money laundering, corruption, and tax abuse and stopping wrongdoing by bankers, accountants, and lawyers are steps in transforming the global economy for the universal good," says Ibrahim Mayaki, FACTI co-chairperson and former Prime Minister of Niger.
As an example, the panel says recovering the annual loss to tax evasion in Bangladesh would allow the country to expand its social safety net to 9 million more elderly people, in Chad it could pay for 38,000 classrooms, and in Germany it could build 8000 wind turbines.