PRESS STATEMENT, 2 September 2014, Kuala Lumpur – Malaysia must make it much harder and tougher for the corrupt to hide behind secret companies if our country wants to keep criminal activity out of its financial system, Transparency International-Malaysia said today as it launched the “Unmask the Corrupt” campaign in Petaling Jaya, Selangor.
Transparency International and its TI chapters, including Transparency International-Malaysia, have taken collectively to embark a 24-month goal of global campaign to make it more difficult, complicated, troublesome and illegal for the corrupt and their facilitators to move and enjoy their illicit assets. Ultimately, the global campaign is to reduce the scope and incentive for large-scale theft of public money and/or solicitation of bribes and other money laundering payments. The solution will require a combination of self-regulation, government-industry collaboration, change and improvement in both technology and culture within government agencies, co-operation among countries for account information.
Transparency International national chapters such as in Australia, Brazil, France, Indonesia, Malaysia, Portugal, Russia, South Africa, Switzerland, United Kingdom and USA have joined hands together to urge their governments to close legal loopholes that could have facilitate the transfer of stolen or illicit assets across international borders. The other objective of Transparency International’s “Unmask The Corrupt” campaign is to restrict the ability of the corrupt and their facilitators to transfer and enjoy illicit assets which are frequently stolen or otherwise diverted from public budgets in other countries.
According to Transparency International-Malaysia’s President; Dato’ Akhbar Satar “Today’s official launch of the Unmask the Corrupt campaign is the beginning of a long-term initiative. As Transparency International-Malaysia calls on our government to advance the struggle against impunity, there is much work to be done to address illicit money outflows, money laundering and eliminate secret tax havens and opaque beneficial ownership.” He added, “Investments of ‘dirty money’ could distort the economy and hamper investment and economic growth once illegal money has entered the global and financial markets, it becomes much harder to trace its origins, and the laundering of ill-gotten gains may perpetuate a cycle of crime and drug trafficking.”
Every country has to prevent and build the capacity to track and prevent money-laundering, strengthen the rule of law and prevent these funds from creating further suffering.
Specifically, the international non-governmental organisation is calling for an end to “secret company ownership” through public registers of company ownership, urging better due diligence in the real estate and luxury goods sector and recommending that destination countries deny entry to corrupt individuals so they are not able to enjoy their illicit assets abroad.
To highlight the problem and to urge change, Transparency International on 1 September 2014 launched a new campaign website, UnmaskTheCorrupt.com
For far too long, corrupt officials have been able to stash their ill-gotten gains in foreign banks or invest them in luxurious mansions, expensive cars or elite education for their children with impunity and in blatant disregard for the citizens they are supposed to serve. They are aided by the complicity and complacency of countries and banking centres that allow illicit financial flows and permit entry to the corrupt to enjoy stolen or illicit assets.
For example, corrupt politicians used secret companies to obscure their identity in 70 percent of more than 200 cases of grand corruption surveyed by the World Bank.
An inventory of grand corruption cases compiled by the Financial Action Task Force (FATF) in 2011 showed that politicians and public officials often abuse corporate secrecy. For instance, out of 32 grand corruption cases analysed (including embezzlement, bribery, extortion and self-dealing), foreign accounts were used to hide the proceeds of corruption in 27 cases. In most cases, the assets were hidden in more than one foreign jurisdiction, including countries such as the United States (19 cases), United Kingdom (13 cases), Switzerland (15 cases), as well as well-known offshore havens such as the Cayman Islands, Singapore, Hong Kong, Jersey and the Bahamas. Moreover, in 28 cases, the individuals involved or their families made use of corporations and shell companies to hide the actual beneficiaries – those who actually used the money for investments, luxuries and lavish lifestyles.
Efforts have been initiated by some countries to increase the transparency in the international financial system as a means to curtail the illicit flow of money. We have to do more.
Progress has also been made in targeting anonymous shell companies over the past year, with the United Kingdom created the world’s first central public registry of corporate beneficial ownership information. Which is a good move but the rest of the world must now move to follow suit – making public registries of beneficial ownership information the global standard.
Despite of the existing guidelines, Malaysians have yet to see enhanced enforcement on this particular issue. What is still common – reporting institutions such as banks and other financial institutions, non-financial businesses and professions consisting of lawyers, accountants, company secretaries and licensed casinos are still remained vulnerable to money laundering activities and continued to be exploited to conceal the source of ill-gotten funds, especially the illegitimate wealth of those bigwig like politically exposed person. With evidence the anti-money laundering act can be enforced without fear or favour by taking actions on the exposed persons.
In that regard, Dato’ Akbar Satar mentioned that “Transparency International-Malaysia will work towards establishing a Civil Society Organisation (CSO) coalition to work together and draw on each other’s expertise and knowledge to achieve the objective of the campaign, calling on the government to “unmask the corrupt”. Beyond the establishment of the coalition, an open letter to government will be submitted, with contextualized recommendations, along with a public petition, in which we will call on the public to sign and support to give strength to the campaign.”
Transparency International-Malaysia is an independent, non-governmental and non-partisan organisation committed to the fight against corruption.
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