The so-called Panama Papers should be used as a launchpad to develop multijurisdictional efficiencies and to promote an exchange of best practices globally to fight corruption and mitigate widespread illicit financial flows.
Swiss Foreign Ministry public international law and legal adviser and director-general Ambassador Valentin Zellweger said this month that the release of the Panama Papers highlighted the increasing difficulties of ensuring corrupt activities remained under wraps in an electronic age. However, it also highlighted the difficulties in taking action after the crime had been committed.
Unpacking the lessons to be learnt, during a panel discussion hosted by the South African Institute of International Affairs and the Embassy of Switzerland in South Africa, he noted that “things had changed” in that it was easy to transport, share and leak information and financial accounts held in electronic format. This, he added, could strengthen the fight against corruption.
In April, the release of more that 11.5-million documents holding information of hundreds of thousands of law firm Mossack Fonseca’s clients unveiled alleged money laundering activities and tax evasion, prompting tax authorities worldwide to initiate investigations into companies, celebrities, businesspersons and politicians, among others.
Several countries’ authorities were sifting through the mass of documents to decifer whether tax laws had been contravened, including South Africa’s National Treasury, which was probing whether the citizens implicated in the offshore bank accounts cited in the leak of the documents from the Panama-based legal firm had flouted local exchange control regulations and tax laws.
The discussion, titled ‘Panama lessons: how to effectively fight corruption and return funds’, aimed to delve into why all major financial institutions around the world needed to ensure transparency and make sure that funds of illicit origin were identified, frozen and returned.
Judicial cooperation and mutual legal assistance between countries where corrupt activity had taken place was becoming a critical tool within a complex environment; however, not much progress had been made in recent years and this remained an area countries had to work on to become more efficient in tackling multijurisdiction crimes.
Zellweger said there was a need for close cooperation between countries to prosecute illicit flows.
However, mechanisms to prevent and deter corruption were critical in easing the post-crime jurisdictional burden.
The “strongest tool” in fighting corruption was prevention, transparency and the rule of law amid a thriving civil society, he added.
This was particulalry relevant as corruption was no longer seen “as a given” that “nothing could be done about”, with countries, citizens and governments increasingly responding to anticorruption measures.
However, nonprofit organisation Corruption Watch director David Lewis noted that, specifically, illicit financial flows and money laundering had not had a large profile in South Africa in the discussions concerning corruption.
The attention of the world, in particular the developed powerhouses, on illicit financial flows was not so much driven by hampered development efforts in emerging economies – this was a focus of the Group of 20 countries that had recently denounced corruption and tax evasion – but rather by concern about terrorist financing.
Illicit financial flows had not attracted much attention in South Africa, Lewis pointed out, but said it was a “space to watch”, as the African nation was an “obvious” platform for money laundering.
“We are the largest and most sophisticated financial system in Africa. “We are deeply connected to [other] African [systems] and the global banking systems,” he pointed out.