ISTANBUL • World powers have failed to deliver on bold pledges to close down corporate loopholes that allow the corrupt to easily hide their ill-gotten gains, Transparency International said yesterday.
It said in a report that up to US$2 trillion (S$2.8 trillion) was laundered each year, often through complex webs of anonymous entities across multiple jurisdictions, and said the Group of 20 top industrial economies must do more to eradicate the legal structures that made it possible.
The report was issued shortly before a G-20 summit in Turkey, a year on from their gathering in Australia where leaders committed to improving transparency to help prevent the use of shell companies for illegal purposes.
But Transparency said that of the G-20 countries, only Britain was "actively working to make it harder for the corrupt to hide their cash" while the United States and China were among the worst performers.
"Pick any major corruption scandal in recent history - Petrobras, Fifa, Ukraine's Viktor Yanukovych - and you will find a secret company was used to pay a bribe, shift and hide stolen money, or buy luxury real estate in places like London and New York," said Transparency's managing director Cobus de Swardt.
Anti-graft advocates have repeatedly called for the adoption of tougher corporate disclosure requirements by G-20 countries, which represent 85 per cent of the global economy.
At the summit last year, G-20 leaders vowed to clamp down on corruption, tax evasion and money laundering by endorsing beneficial ownership principles that Transparency said should have led to the dismantling of legal structures that allow anonymous companies or trusts to transfer and hide money often stolen through corruption.
"It makes no sense that this gaping loophole for the corrupt remains open," Mr de Swardt said in a statement.
Transparency called for governments to set up a central public register containing information on beneficial ownership and to tighten up corporate oversight on those aiding the corrupt.
Currently, it said, only Britain and India require companies to record information about their real owners, while Brazil and South Africa had not even adopted a legal definition of beneficial ownership. In eight economies, it said, including the leading financial centres of New York, Tokyo, Shanghai and Sydney, banks can complete transactions even if they do not know the identity of the true person behind the funds.
And it said properties worth hundreds of billions of dollars in London and New York have secret owners, because in seven G-20 nations, estate agents are not required to identify the true buyers and sellers.
Turkey has said the fight against corruption in the public and private sectors and tax evasion would be on the agenda at the summit on Sunday and Monday in the resort of Antalya, although the gathering is set to be dominated by the Syrian conflict and the migrant crisis.