Jun 08, 2015 News
– Urges new govt. to curtail illicit financial flows
As a new international report reveals that Guyana is extremely affected by illicit financial flows, the Guyana Human Rights Association (GHRA) has opined that the phenomenon has bled Guyana of resources for development.
In light of the new findings, the GHRA urged the new Government of Guyana to curtail illicit commercial financial flows by a specific percentage in a specific time.
A new report, titled “Illicit Financial Flows and Development Indices: 2008-2012”, was recently released by Washington DC-based organisation Global Financial Integrity (GFI). The report took a look at the illicit financial flows (IFFs) present in 82 countries which were seen as “developing” nations, from the period 2008 to 2012. Guyana was one of two Caribbean countries included in the report.
According to the GHRA, the report highlighted the devastating negative effects of IFFs on poor and developing countries such as Guyana. The GHRA noted that during the period of 2002 to 2012, Guyana lost an estimated annual average of US$283M. This money was lost due to various forms of commercial money-laundering, principally by misinvoicing during the import and export of goods. The figures presented did not include the outflow of finances from criminal drugs and smuggling enterprises, GHRA added.
GHRA further said that the new study demonstrated what the annual figure lost truly meant when compared to national expenditures on education, health, trade or gross domestic product (GDP).
“Government spending on fundamental social needs, such as education and health, are miniscule compared to the amount of illicit money flowing out of the economy,” the local human rights body said.
Additionally, GHRA opined that if tax evasion and customs fraud were eliminated, Guyana would possess “all the resources needed to lift the society out of poverty”. Tax evasion and customs fraud constitute over 80% of commercial money-laundering, the GFI report showed.
“In other words, if Guyana can staunch the hemorrhaging of financial assets, the resources required for the poverty eradication agenda of the new Government will be available domestically,” GHRA said.
Hence, the GHRA stated that if the Government of Guyana wanted to indicate its commitment to remove the blight of illegal financial flows, it should do so next month at the major UN Conference on Financing for Developing. The conference is set for Addis Ababa, Ethiopia from July 13 to 16. Additionally, GHRA said, the country should aim to restrict IFFs by a certain figure in a fixed timeframe.
According to the new report, Guyana ranked in the top 25 for most affected countries in 6 out of 9 areas. Guyana’s losses to commercial money-laundering are 511.2% annually greater than expenditures on education. This placed Guyana as having the sixth worst ratio in the world. For expenditures on health, Guyana’s illegal revenue losses are 264% greater, the fifteenth worst situation in the world. Further, Guyana had the fifth worst ratio in the world for revenue lost compared to the size of its population.
As a percentage of Gross Domestic Product (GDP), Guyana’s losses are 17.3%, the 15th worst position in the world. GDP is the term covering the monetary value of all the finished goods and services produced within Guyana in the course of a year.
In the report, the GFI also made a number of recommendations in handling IFFs. One of these recommendations was concerted action by the international community in assisting not only nations with high levels of IFFs but also those that have huge percentages of their economic foundation eroded by the phenomenon.
Further, GFI recommended that all countries should, at a minimum, take steps needed to comply with all of the Financial Action Task Force (FATF) Recommendations to combat money laundering and terrorist financing.
“Regulators and law enforcement officials should strongly enforce all of the anti-money laundering laws and regulations that are already on the books, including through criminal charges and penalties for individuals employed by financial institutions who are culpable for allowing money laundering to occur,” GFI suggested.
For the report, four different sets of developing countries were combined to create a unified list of developing countries in particularly difficult development situations, GFI said. These country groups are heavily indebted poor countries, low-income developing countries, least developed countries, and lower-middle-income economies.
According to GFI, the groups were chosen to highlight those countries most in need of development financing and/or domestic resource mobilization.
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