India and other G20 nations have resolved to battle tax evasion, terrorist financing and money laundering that are reckoned to threaten the very integrity of the international financial system.
A communique adopted by G20 Finance Ministers and Central Bank Governors on this issue assumes immediate significance in the backdrop of the recent “Panama Papers” leak, detailing information on tens of thousands of shell companies used by wealthy and influential individuals from various countries, including India, to launder black money and evade taxes.
Finance Minister Arun Jaitley, who represented India along with Reserve Bank of India Governor Raghuram Rajan at the forum, issued a call for strong measures against the tax havens.
In his remarks, Jaitley, while welcoming the agreed timeline of October 2017 for shareholding review in IMF, stressed that the new quota formula should enhance the voice, role and voting share of the developing countries and reflect their increased share in global GDP.
likewise, the World Bank’s shareholding must also be reviewed so as to reflect share of the developing countries in the global economy, said the Finance Minister even as he reiterated the need to leverage the credit rating and balance sheets of Multilateral Development Banks to ensure increased infrastructure investment in poor countries.
The G20 communique, underscoring the importance of financial transparency and its effective implementation by all nations, urged those that have not committed to implement the standard on automatic exchange of information by 2017 or 2018 to do so without delay and sign the Multilateral Convention.
“Improving the transparency of the beneficial ownership of legal persons and legal arrangements is vital to protect the integrity of the international financial system, and to prevent misuse of these entities and arrangements for corruption, tax evasion, terrorist financing and money laundering,” it said.
Reaffirming its resolve to “combat decisively and tackle all sources, techniques and channels of terrorist financing”, the G20 called upon all countries and jurisdictions to join in its efforts, including through swift and effective implementation of Financial Action Task Force (FATF) standards, the new Consolidated Strategy on Combating Terrorist Financing and provisions of the UN Security Council Resolution 2253.
Warning that “defensive measures” will be considered by the group against non-cooperative jurisdictions, the communique said it expects all countries and jurisdictions to upgrade their Global Forum rating by next year’s G20 summit. It has mandated the Organisation for Economic Cooperation and Development (OECD) to establish objective criteria by July to identify non-cooperative jurisdictions with respect to tax transparency.