 Good afternoon again. Hope we are all feeling a little bit more refreshed after this the snacks and another infusion of The coffee very important this time of day, especially after the holiday weekend you all just had recently We're gonna move to our third and final session now curtailing illicit flows global regional and domestic policy options We will have our presenters talk about what Brazil could be doing should the next government Wish to tackle this more forcefully, which we hope this project and you all will encourage them to do Leonardo Barlaquie one of our panelists from the previous session will be moderating this and he is joined by Raymond Baker the president of global financial integrity who will talk about some of the general policy options and we'll also be able to talk about what the US government has been doing on this issue and Matt Woods the deputy consul general and head of UK trade and investment With the British consulate general here in Rio de Janeiro, so I will turn it over to leonardo Okay Thank you very much for staying you know has been a full day of discussions And you know a I think that this session has already Started in a previous one, right? I think this is more or less gonna be We like it or not some kind of follow-up of the previous one which already had that global and the domestic levels Interwind a lot, and I think that this this is the way That conversation should should really go so Our distinguished panelists here are well doctor Raymond Baker Which obviously at that point doesn't need any further introduction? we already know Not all that he he he did or all that he has To offer us if we were really serious about reading the whole bio, but we certainly know Raymond Quite well at this point for for this workshop and just reminding you that the president and The The first I won't won't even say the biggest maybe I could but I would say this The first force first real force behind the whole initiative of global financial integrity I can't I can't tell that from from the beginning's right brain from 2006 when we were discussing Idea of doing those reports at the fourth foundation in in New York and was a A great great privilege and a pleasure to to have been able to To fund them and we also have dr. Matt Matt Woods, which at present is deputy council general Okay, right and it's here. I think before about a year has been here and he previously were Based in Ethiopia and also had roles previously to that in London and Before that it was before his engagement with the foreign office. He also worked in the private sector and OECD and also Without French civil service, right? That's correct. Okay, so we have two very Distinguished panelists and I'm very much willing to participate in that at that time There and not here which is kind of comfortable. Okay Without further ado, I think very more you come first, right? Okay. Thank you. Thank you, Leonardo. And let me Start off with another story The book that I wrote was entitled capitalism's Achilles heel and it was subtitled dirty money In 2006 when we formed global financial integrity my colleague Tom Cardamone and I Sat down and we said to ourselves We can't use the term dirty money this makes people nervous and upset and Is you know, we've got to figure out something that that is better than that So, you know, we thought about the illegal capital flight We thought about other terminologies and so forth, but we finally zeroed on illicit financial flows It's exactly the same thing, but it sounds much more sophisticated much, you know, much more saleable in the global agenda, so At the time that we zeroed in on those words illicit financial flows that concept was not in the The political lexicon it what that vocabulary was not used In talking about this subject matter and I'm pointing this out to you because I think it's it's true to say that Vocabulary influences Acceptability and we have succeeded in getting the concept illicit financial flows onto the global Economy agenda those three words are used by the World Bank the IMF UN OECD National governments Regional organizations and so forth. We've gotten those words into the vocabulary and it's very much the support and the encouragement and the funding of Norway and the Ford Foundation that have accounted for that yes We and others have worked to get this agenda on the table, but you too organizations in particular government and foundation Are the reason why these words are now used accepted in in the book Okay, we've gotten the concept illicit financial flows into global thinking into the political economy agenda Have we made any progress in Trying to curtail this Phenomenal and I use the word curtail because I do want to be clear that that's what we're talking about We're not talking about ending this we're not going to end it But we can substantially curtail it We think with some fairly straightforward measures and we've made some progress in that direction As I will illustrate as we go through this There are two things in particular that we seek to do and that is to Have much greater transparency in the financial system the domestic regional and international financial systems we advocate transparency stop the secrets you stop the hidden movements of These funds transparency is the agenda that we work on now another part of that involves greater cooperation between governments in Shutting down the channels through which illicit money flows and Leonardo and Olaf have both talked about tax havens. This is This is a big part of it But I'd like to go on and talk about With those two policy measures What are the teeth what we need to put teeth into these concepts and what can we do to accomplish that? first of all We advocate Transparency of company ownership It is ridiculous to do business with an entity where you do not know with whom you were doing business This is unacceptable Having said it more in more disguised companies exist in the United States than any other country And this is because we allow corporations to be formed at the state level And as you mentioned Delaware There's been a race to the bottom by all of the other states in the United States to be equally open to Anonymous corporations as is Delaware to the point that we now have millions Corporations are formed in the United States at the state level not it. There's no such thing as a national corporation and so the States have been racing to the bottom to make it easier and easier to establish such censuses So we literally had millions and millions of entities in the United States Where no one knows who are the natural persons owning those accounts? except the company formation agent and He may not on occasions know if he's acting on behalf of a foreign tax haven Entity and he doesn't have to report that in the documents that he files with the state authorities. So we've had Prosecutors Tell us that they have frequently run into a roadblock that they cannot get past when they're trying to trace drug money or corrupt money or other Illicit money. They cannot find out who's the natural persons owning accounts step one know with whom you are dealing There is no argument in favor of not knowing with whom you are dealing second thing that we advocate is Automatic exchange of financial information across borders. We've talked about this a little bit This is moving The G20 is encouraging this the OECD is encouraging this we're making substantial strides Towards the automatic exchange of information across borders. It's the word automatic. That's important here For a long time we've had a process whereby one country can request information from another country and then that other country can consider whether or not it wants to give the requesting country that information and may take three years to do it by which time the Information is of little value We're now talking about a process of automatic exchange of tax and and financial information across borders This has existed between the United States and Canada in fairly good form for a good many years For 25 years Mexico requested to have the same thing between Mexico and the United States has existed between the United States and Canada and Only recently have we implemented that giving Mexico automatic exchange of Information within the European Union. There's a good bit of automatic exchange of information the savings tax directive means that Countries will report to the other country earnings on bank accounts by the foreign citizens in that country so that that information flows automatically this is beginning to To work and indeed I Think this will go global fairly soon It was mentioned this morning that I've had the pleasure of serving with Toppo and Becky on the high-level panel on illicit financial flows out of out of Africa We've gone to a number of countries that have said to us We don't have the capacity to deal with this automatic exchange of information And they've said let us come into this process in five years or seven years or something like that and President and Becky has argued the opposite. He has said that's not what you say you say you're ready to work with this Immediately, you may not be able to deal with a hundred percent of the information That you receive or that you're asked to give but get started get into this agenda from beginning I think this is beginning to move and Then third thing that we Recommend is stronger efforts to curtail the invoicing of trade Throughout this day, you've heard us say that it is the invoicing of trade that moves more illicit money across borders than any other mechanism indeed it moves more than all other mechanisms combined this is I Don't know if this translates into Portuguese a lot, but this is where the rubber meets the road This is this is where This is this is where this issue really becomes critical is in trying to figure out how how do you make Trade misinvoicing reduced. How do you make it more transparent and more? More able to be watched by Developing countries and there are a number of steps that can be taken in that direction Legislation declarative statements real-time access to pricing data and Audit verification, I will discuss each of these in a little bit more detail first of all legislation We recommend to every country that we deal with That you have legislation that says it is illegal to intentionally misprice trade For the purpose of manipulating VAT taxes customs duties income taxes excise taxes or any other form of revenue That may accrue to the government pass a law that says it's illegal to do that First of all get the law on the books that says it's illegal for you to do that even if you're doing it in your head office Far away if you're using the trade mechanism to manipulate VAT taxes customs duties, etc That is against the law against the law in this case of Brazil Then going on from there. We recommend that Corporations be required to sign a declarative statement Say that they have abided by that point. I don't like reading slides, but in this case I'm going to read this one to you in Relation to the this is a statement that would appear on the annual accounts of the corporation would and would be signed by the chief executive officer of the corporation in Relation to the importation or Exportation of goods or in relation to the importation or exportation or utilization of services or Intangibles there has been no misstatement price Quantity quality volume or other substantive term of invoice One for the purpose of manipulating customs duties VAT taxes income taxes excise taxes or any other form of revenue is collected by or to be collected by the government or To for the purpose of evading or violating Banking capital or foreign exchange controls or anti-money laundering statutes or terrorist financing provisions Sign it Sign it that you have abided by that. Is it a perfect solution? No, we're not talking about perfect solution We're talking about curtailing this They're not a whole lot of corporations that will intentionally manipulate the prices of their imports and exports and then require a Signature that says they've done no such thing part of the reason is because at some stage that Corporation will have an employee who departs either willingly or unwillingly and says why am I glad to be out of there? You can't imagine what I had to do while I was working in that company I had to manipulate these prices all the time It's going to be a very brave CEO of a corporation that says I'm gonna buy I'm gonna sign this at the same time that I'm violating this provision over and over and over again Sign it Not perfect. It's a step in the direction of curtailing what we're talking about Now there is a another step that is very important and that is giving Developing and emerging market countries access to Pricing data in real time give you an example The United States publishes its trade data on Imports and experts according to 25,000 categories called the harmonized system the harmonized system of identifying Goods that move across borders It is Accessible online We are advocating and are working with developing countries to access that information information online so when you see a Product coming through identified by a harmonized code you can look at Comparable prices in the United States and indeed additional such information is available in the UK and Germany and some other European countries And you can see does this roughly conform to world market norms? And if it doesn't you have a risk management tool capable of identifying those transactions that should have extra scrutiny again Not a perfect tool, but it's a valuable tool knowing. What is the world market price for items in this? That kind of data is becoming increasingly available and we work to make it increasingly available to the customs departments of developing countries Another step that we recommend is auditors looking at Trades transactions that have been Invoiced when they audit the books not trying to make policemen out of auditors But let me give you an example of what auditors see all the time An auditor can look at the same item being imported or exported Once a month every month for 11 months of the year and then he can see that in the 12th month of the year The price of that item was substantially varied up or down as the case may be and Then the first month of the succeeding year it went back to the original Manipulation was done in the last month of the year for the purpose of manipulating the income taxes of the of the company Auditors can look at those kinds of transactions every day and they are under no obligation to report We think they should be under obligation to report it. We're not asking them to review every trade transaction We're asking you to report what you see when you see it That would be a valuable addition to this business of of trying to curtail the miss invoicing of trade What we're talking about in this entire framework of addressing illicit financial flows is Political will You've perhaps heard the expression concerning real estate It's location location location in this case. It's political will but they can will political will Nothing that I have outlined here this afternoon is rocket science Nothing is that difficult to do It's fairly straightforward and can be implemented the break that people have to make in their thinking is We're not trying to stop it all together We're not trying to provide the perfect law that can stand up in a court Against somebody that has been doing the wrong thing We are trying to do on a day-to-day basis the curtailment of this phenomenon That's where we're coming from curtail this and as I said this morning Leave the money in the emerging market and developing economies. Thank you Hi, my name is Matt. I feel like I'm at two main disadvantages Just now actually I'll put three The first one being I thought it was an absolutely excellent speech. So thank you very much for that really powerful The second disadvantage is speaking last at a conference and the third disadvantage Which is now quite familiar but never very comfortable is talking about an issue on which I don't know Enormous amount to a room full of people who do know and enormous about about it And so apologies in advance for that I want to go guys a boy they can what says now thank you so for the opportunity to go for learning place Don't just go put it something Well, so why am I why am I talking today? And what am I going to tell you? Happily I want to pick up on a few of the themes which Raymond spoke about just now And I think I'll start with the last one about political will And this is something which which my government and my Prime Minister David Cameron feels extraordinarily strongly about Personally and it's an agenda which has been trying to drive both domestically and internationally for some years and perhaps most notably since the G8 locker and summit last year and I think if I try and put this Topic into context it really falls into his center three T's agenda I'm glad I'm not speaking Portuguese because it's not three T's in Portuguese The first one is tax the second one trade and third one transparency. That's I'll take them in the other order And I very much like the Subtitle here about the importance of this issue for improving both national and international Prosperity something very dear to David Cameron's heart given that when he took over as Prime Minister in the UK We're basically bankrupt and he spent the last few years trying to pull us out of it so on Transparency, I think again there are two real size this I gather you've been speaking quite a lot about enforcement I'll come to that in a minute. There is of course a positive side to transparency about making Governments more accountable to their citizens by not just making information Available but also accessible and this is something if I try and connect to Brazil a little bit This is something that the UK has been working very much with Brazil on as partly as co-founders of the open government Partnership which is a multi-datcher initiative which tries to do exactly that and actually it's interesting to see Rogerio from FGV who are doing some great work on the transparency of Budgeting in Brazil looking at the transfers between the federal and the state level And what that money gets spent on how effectively it's been. It's really interesting stuff I recommend you all to look at it the website is the DAP department for analysis of public policy of FGV So under as part of our kind of cooperation in Brazil on this agenda. We've been working on freedom of information On the anti bribery act both of which in Brazil model on the UK Legislation the Brazilian freedom of information act has been tremendously successful 87,000 requests of information that hadn't happened before being made by citizens and being responded to In 95% of cases within 11 days. I mentioned this because there is I wanted to kind of underline this positive side to To transparency also On the more kind of enforcement side. I couldn't agree more about the importance of knowing who you deal with Me my prime minister couldn't agree more with the importance of knowing who you deal with and that's why Our government has pushed forward this initiative on beneficial ownership So it no longer being possible For somebody to act in the way that you have described in your in your last talk I'm about it being now in the UK We will have a public register of every of every company we have that already But everyone within that company who has either more than 25% of shares of voting rights or any other power over that company So when the prime minister initially originally committed to this last year at the locker and summit he didn't commit to it being public He just said we should collect the state and we should know it as a government and after a public consultation He's now decided. No, we should actually make this absolutely public And so that's I think a really a really positive element. I think what echo what you said I think the second positive development which is underway rather than concluded is You mentioned tax havens unfortunately Some of these tax havens are British overseas territories or dependent territories. Yes, absolutely So the prime minister's written an open letter to all of those territories asking them to please join the initiative to consult and to Implement this public register of company official ownership of companies I think it's fair to say that progress has been patchy Since then but at least it's on the table and I think with this kind of issue It's about getting on the table and that's why the work that you and other Organisations do is it's quite so important to bring into bear the pressure on governments to be better Good I'm gonna pass to tax and pick up on something else which which Raymond mentioned just now In fact two things One yes, so domestically we believe that having a stable tax base And having in fact the largest number of double taxation agreements of any other country in the world Makes us an attractive country to do business with now. We don't have one with Brazil That is an entire other seminar, which I'm not going to get into But we'd love to have one And we see kind of tax as an issue a so fundamental I'm including to the developing world that we spend some 20 million pounds a year on the tax capacity Programs, I'm sure USID spends a pretty significant amount as well I was very interested in what you were saying about about Africa having been in in Ethiopia and worked on Somalia Tanzania, Uganda Kenya enormous amounts of Elicit financial flows and incredibly difficult to get handle on there. We looked at more from the financial from terrorist funding side, but Pretty relevant as well as well here For example, we are working so if I bring this back to Brazil We're welcome to say to feather out on how to introduce a Authorised supplier process and so you can have pre-clearance for goods before they leave at the port of Oregon So that's all about trying to get a better handle on What's your what you're able to tax and how you do that? And I think the most important thing to highlight is on the automatic exchange of information as you as you picked out This is this is something else that UK happily is out in front on so we are officially an early adopter whatever that means So we will put it into place by 2017 Brazil is also a relatively early adopter They've committed to doing it in 2018 and I agree that the key is absolutely to make it automated make it automatic I'll turn at the end to our aims or our hopes for the G20 conference in Brisbane But that is absolutely absolutely one of them and more specifically to Brazil When David Cameron was here in 2012 he did sign a bilateral agreement with Brazil Which hopefully means we won't we won't and Brazil won't have to wait 25 years for a request to come through Finally on trade, I mean I guess Trade it's increased trade. We believe very strongly. It's better for everybody increases the size of the cake fine But in order to have really effective trade between nations, you've got to have some confidence Both on the transparency side and on the tax side, which is why I think it's impossible to divorce the domestic in the international context I was interested in how you started started your talk And I'm not surprised to hear that you've been dotting around between the two over the last over the last couple of days I think it's impossible to separate them and actually I think it helps to build political will in any country And if it is part of an international effort and if that international effort is not just between governments But it also includes civil society and all the pressure that can bring to bear so Finally turning to what is next for us well, I think domestically we still have some work to do in in Trying to add some pressure onto the overseas territories and dependencies and encouraging them to To be more to be more transparent to adopt the beneficial ownership initiative I'm not sure I don't you talked about today with another thing where we're focusing on is EITI the extractives industry Transparency initiative another thing we are Canaan Brazil feels rightly that has very strong domestic Transparency requirements on mining Oil and gas exploration and so on so it doesn't necessarily at this point See the value in a see enough value in joining a multi lateral effort, but we'd love to see that change But looking forward to Brisbane and the and the G20 What are our objectives? They're going to be that we would like more countries to sign up to EITI absolutely We would like to see more countries sign up to be the beneficial ownership initiative On the tax side We absolutely want more countries signing up to the automatic exchange of information and on the trade side again I don't think you've perhaps talked about it too much But strong support to the WTO and the barley package and the trade facilitation agreement So that's what we're going to be going into Brisbane hoping for and I'll be very open with you about that Because at the end of the day that feels that feels appropriate Thank you very much the opportunity to speak to you today and I'll hand you back over to Leonardo Okay, so thank you very much for presentations. I think they were very interesting and used because they touched on concrete concrete recommendations and concrete measures that could be could be in a way and Well, I think Raymond that you you've finished the same way I did in the sense that stressing or underlining the question of political will right I'm not sure if we have a different approach to that political will in the sense that I'm Perhaps more skeptical about its existence than you are But anyway, I think we totally agree on the fact that without the political will It's very little can be done. Uh, so in your case, let me just throw a couple of questions here just to warm up for the discussion with our colleagues in the room here The first question that I that I want to Raise for you. It's something that you mentioned not now you mentioned in your in your opening. No in your your first Your first participation first panel Which is the fact that services are out And at the same time, I think you also added to that And I think we we all know the services are becoming more and more and more the bulk of International trade not tangibles and so Looking forward my question is well, if We stick with trade alone we're going to be missing Big chunk of like trade in terms of like tangibles and other tangibles. So Why services are out and What has to be done in order to get them in so that you could you can have a more accurate Measure and picture of what's exactly happening. The second question is more of a Maybe a detail on on the Recommendations that that you just laid out One is like the price checking and the other the audience, right? Obviously, I think those things will They occur by the millions right millions of transactions So One could raise the point. How can you monitor millions and millions and millions of transactions? If they're done like on a daily basis, etc but then There is where my question enters Could this be done at least initially by some sort of algorithm? or algorithms that would like run Like for running to millions and millions of transactions and when there was a discrepancy or some sort of Difference, whatever Some signal will pop up and then Someone could be directed to verify that if this could be done or if it's already in the works that would be for a change A kind of financial innovation that would work work for good would be not not Financial weapon of mass destruction, but Something different from that. So I just want to I want to hear from you on on that if This is already going on or is there something being thought about that and in your case Matt, let me also throw one question that will be Provocative because I think the whole idea of the of the conversation and the debate is to try to provoke some some Reactions is that you rightly said that well, you're very much in agreement with All the recommendations that Raymond laid out But I think there is a point that I think has at least to be raised which is the fact that We all know London is the financial capital of Europe is very much Aware of that It's proud about that And of course on the sort of pragmatic pragmatic side Very similarly to what wall street is to new york the city of london Generates the bulk of the tax revenues that for for london, right? So Your mayor there Is always mentioning that so it's very happy to have them there And the point is that that means a lot of political muscle from the side of the financial industry, which You correct me if i'm wrong, but which generally is not very much on the side of transparency much the contrary they are More and more not more and more They are generally speaking on the side of opaqueness so if you Agree with that or I don't know even if you don't agree with that. I would like to hear from you uh on this sort of transparency versus the political muscle from the from the British financial industry Uh, where does the political will? Will change Those things where does this stand right now? Just to start the conversation Okay You really know how to put your finger on the yeah On the issues services and in tangibles I think it's about 27 26 27 percent of global trade at the present time is services and intangibles and it may be Much higher than that because we don't There's a lot of aspects of this that we don't know anything about what to do the prevailing Global norm is called the arms length principle That is that whether you are related parties or you are unrelated parties in an import export transaction You should conduct business between yourselves as At arms length as though you are not related. This is the standard And we are able to look at data and see Where that operates satisfactorily In connection with merchandise. We're not able to do that in connection with services because there's no data collected There's very little data collected on services. So what to do With services what we have recommended to some governments, I'll take uh India as an example We have recommended A requirement for most favored nation's status In the pricing of services Once again signed multinational corporations Sign a statement that you have given to us most favorable nation's status In the pricing of services and intangibles charged to companies operating in our country so that Licenses and royalties and software and management contracts and so forth Have to be priced Or you were requiring that they be priced at the most favorable level that you're giving to any other company country The availability of comparable pricing data to check that Is not Is not there. So how do you get comparable data? If you have a doubt That you are being given Most favored nation's status The country can call for documentation on the prices at which you charged Selected other countries proving prove that the number you've given us Is comparable to the best prices that you've given to these other Countries. There's a lot of documentation there and it's it's it's difficult Probably be years before we ever get to the point that we do something like this But again, my point is it's not rocket science. It is something that can be done with Political will to get there Services our approach is require most favorable nation states Price checking the second question that you've had. How do you? How do you deal with this again is is a little bit complicated? When a ship is coming into a harbor And is About to offload its cargo That ship is required to send ahead Details of the bills of lading That are on the ship to be offloaded the bill of lading does not include the price The bill of lading simply says this is the specifications of what's going to be offloaded in each of these Transactions The invoice data is not there It is not required to be sent because it's not collected bills of lading data Is collected invoice data is not So what you have to do is you have to figure out where are you most vulnerable For uh mispricing and you check that So when we do work We work with countries to figure out Which commodities are most likely to be Miss invoiced and which countries are most likely to participate in that Miss invoice so we can then Direct a developing country or transitional Economy or emerging market country to To pay particular attention to those things that we've identified as most Volume again, it's not perfect, but it gives you a way of checking those things that that are most likely To be mispriced Ideally and I suppose this may take 50 years to do we would like to see ships Send ahead the selection of their invoices So that you've got that kind of thing But the global trading system is not in that position at the At the present time. So what you do is you use price checking To apply to those areas that you think where you think you are most vulnerable to Well, yes, it was a good question. I'll give you a general rather than a specific answer I think I probably recast your question as How can we ensure that the strength of the regulator Uh Wins against the strength of financial innovation and I think that's the story of what's happened over the last Decade or more than that and you asked about How we would muster the political will in order to kind of get the balance right On that I think there's probably two answers and the first Is there's some irony in the fact that it was a supposedly left Wing or traditionally left wing governments which presided over an era of deregulation And now a predominantly right wing. Okay coalition government, but predominantly right wing government Which is presiding over an area of tighter regulation There we go since I think the the best Thing that could have happened to strengthen regulators hand in a perverse way was the crash and the problems So I think sometimes it takes a shock like that. Perhaps it would have been better to have had a slightly less significant shock to really make Not just the government, but the public civil society Realized that there has to be a stronger balance and tighter regulation and public acceptance of that I think that's really important where you talk about where political will comes from. I think that's a big part of it What do the public want? Well, they want jobs. They want economic growth. Yes How do they get there? Well, okay the details of the details They're not going to get into a huge amount of that So in a way the crash brought the issue into public consciousness in a way that it wasn't wasn't there before So I do think there is now political will and that comes from public legitimacy Recognizing the need to take a tighter Approach to regulation and there are various technical Ways that that's happening and I'm afraid I'm not going to speak to them I don't know them. I think there might be the financial supervisory board fsb That rings the bell I'm looking around the room because someone in the room probably knows more about than I do Okay, thank you. So now I think it's Your time so Questions observations Whatever you want just raise your hand We'll have mics around And please say your your name and your affiliation Hi Roger you So very well from mines and due to the Vargas Foundation fgb It's a great pleasure to co-host this event Raymond and Unfortunately, I wanted to be able To make it in the morning and at least I'm here during the afternoon and to take advantage of those clarifying and lighting presentations of yours and I think that the case of illicit financial flows In general is very important in the case of Brazil. It's much more important and I I managed to read the report you released yesterday and it astonished me a lot The amount of illicit financial flows from Brazil during the period analyzed It's Huge really really huge and on this In based on your presentation I have a One question that crossed my mind, which is You mentioned two things that for me Are very important in order to curtail illicit financial flows not only in brazil but elsewhere Which is the first one is uh, transparency. You mentioned transparency one important Thing to be pursued in order to curtail illicit financial flows and the other one Is the uh, political will and uh I I I was thinking about Uh, how transparency can be connected to Uh, political will. Let me clarify my point. Uh My transparency and that this is one thing that I've been working with at fgb Uh, uh, we are very used to to To think that, uh Put information available is the same thing that put information transparent And one thing that we've learned from our experience is that Sometimes these are not the same thing and to to make information transparent is to make then Intelli intelligible understandable for, you know, the vast majority of people because By making those information intelligible to the vast majority of people, you know, uh, the so to speak or generally speaking political participation Of the society will Help to entice so to speak political will And uh, I would like to hear you on this, uh, interconnectedness between available to transparency and political will So my my point is, uh, can we, uh, and the institutions like yours institutions like mines Institutions like fgb. I see them very important Institutions that will, you know, put some pressure on make those type of information more transparent Not available, but to spare in order to entice society's participation, uh, you know to curtail those flows because those flows, uh You know, uh Damage a lot Of the economy So, uh, I would like to hear you on this if you if you'll think, uh, that, uh, put more transparency And uh by means of making permission more transparent We we we we eventually be able to invite society to this Important debate I think that's that's one point that The nargo said before the See political will It's something that we we say that we don't want to face the the political reality the the the the the The type of coalitions that creates the governments. So Uh, it's difficult to see this kind of change happening in for example after something like citizens united and Taking the The corn character in angels in america. There is something called clouds Who has clouds to To create this Re-regulation So that's one thing that we must start to look Who is uh in whose whose interest the re-regulation is happening That's one. I think that should be one kind of research because Uh, political will itself won't resolve the The the the the the the kind of coalition we have in this interest and coalition It's not just politics, but the the the people that have the money Uh, and this there's a problem in united kingdom. That's the long-done real state markets Uh became some kind of a way to To save money without risks Of uh, for example, like cyprus. That's the the money disappear For people from china, uh, russia, so It's quite interesting at the same time that you make a discourse of oh, we are trying to be transparent blah blah blah At the same time the there's this Isuberance of the london real estate market not the the real estate market in uk, but specifically london and at the same time That uh, I don't know who could make some pressure against kaiman islands virgin islands Virgin islands we have a A history with the virgin islands because the the most famous Coru politician in brazil had a process in virgin islands So we know a lot of virgin islands and See, I don't know who could pressure virgin islands perhaps If the the the one that Has some kind of authority over there Is the united kingdom the pressure should come from united kingdom and not just oh, you should do this I believe that maybe there could be some More pressure that could be done, but The thing is I we don't see this so it's sometimes it looks like You're doing some lip service to transparency, but at the same time the the the crucial thing That's for example, switzerland is trying to deal because of the pressure of germany and the pressure of uh, united states You're not dealing with And this thing is tax evasion and tax sheltering And dirty money If you could just add a couple of points to what he said because I think he raised something that I think Will get you into a little bit more complex environment to To respond to him The first one is that And it's a question to you related to to paulos is that You just said okay, we had the shock. We had the crisis. So now people are much more aware of the problems and they could Help a lot in terms of building those these political will without which we Cannot think in terms of real reforms on the other hand. My apologies said it's also a big chunk of reality meaning that the city claims and Advertise itself as okay. We're the We're the financial capital. Maybe well for the financial capital of europe and well really We're aiming at being the financial capital of the world Which means we have to please the russians the chinese and all the other foreigners Corporations etc with enough money to park it here so that they feel comfortable Doing business in our financial arena And again, this Creates, I think attention a big one in between those interests there That somewhere or the other has to be they have to be pleased And the people down there, which The ones who want jobs development set so the completely different agendas and completely different menus, right? And just to finish up in terms of remembering some not remembering It's happening as we speak uh, okay, we had the chalk we had financial a lot of financial reform talks and some of them were Even quite aggressive remember the german minister former german minister of finance sir mervin king It was it was a very interesting moment on that It passed it's not there anymore what Concretely happened in the u.s. Was dot frank dot frank was already passed Still there is being washed out a lot Thanks to the interests and the power of the financial industry in the u.s. And now it has what 800 pages with i don't know Some thousand other pages in terms in order to clarify those 800 pages so With political will with uh, I don't know it is a bit warren with senator dot senator frank occupy wall street a lot happened there in terms of civil society And what we're seeing right now is that god frank. It's not that promising after It already passed So that's just I wanted to to add to paul's reflection Okay Let's let's reverse the order didn't you you go first she goes. Yeah Well, let me start at the end. I mean, I think I don't know very much about the u.s. Political system But I do know that they're struggling to pass any legislation whatsoever Um, so I don't know whether this amendment's got caught up in that But it seems I would be wary of conflating the two I think And in the uk we don't have such a Currently deadlock system of legislation and executive So perhaps One can have more hope in the uk. I don't know I don't know Coming to Paolo your your questions Yeah, I didn't mention the british virgin irons and the cayman irons by name But I did say british dependent territories and overseas territories which are by which I meant Particularly those two but also jersey Well, we're at it also Bermuda. Yeah, there are quite a few So, yeah, you're right. This is a problem. It's a problem for the world and it's a problem for us And we need to be dealing with it. So I take the point absolutely You talk about pressure It was only in april of this year that the prime minister wrote this open letter to them and really started to ratchet up Both the public and the private pressure So, yes, I would also take the point that that could have happened sooner. Yeah, I'll take that point But I would argue that we are now trying to step up Both internationally and specifically with the overseas territories and the dependent territories and particularly trying to offer something practical So as well as just saying you must do better. You must do better trying to say look and here's a way you can do better Here's the beneficial ownership Why do you start consulting your public? Why don't you start building this coalition that we were just talking about that I was talking about Earlier and see if we can build some of this pressure to change around some of the drivers for change We thought your point was was very well made on How do you create these conditions pressure and how does that translate into sustained reform? Well, yes, that's an that's an excellent question. That's a country specific question I'd probably also argue it's an issue specific question and I don't have the answers on this issue I think it's pretty recent. I was interested to hear you've been Raymond and others have been coming to brazil for you had 25 15 25 the enormous amount of time And suddenly we're sensing a very exciting moment here in brazil on this issue of illicit financial flows. Why is that? I don't know. I think probably there's we could have 20 different opinions in the room on why that is and how to sustain it Um, and I think if I bring that back to the uk Okay We're trying we're at the start of what's going to be quite a long and difficult journey But I hope I hope you'll recognize that we're doing it in good faith at least even if it's even if there'll be bumps along the road On the london housing market and pleasing the russians and the chinese Well, I've just been reading about how we're not pleasing the russians in ukraine And various other places And I think also you can separate investment in a housing market, which I find personally uncomfortable as I don't have a place in london And now that's looking increasingly out of my reach And yes, so that yes, absolutely the housing bubble how to deal with that how to deal with the kind of second home phenomenon is mainly russians Rather than chinese looking as a safe place to invest. Yeah, that's a that's a significant problem for london real estate I don't think that's the same. I don't think that means the same as having to please russian chinese or any other Foreign or domestic investor in financial markets. I don't think that's right. I don't think that's the same thing I think having an open economy an open liberal economy Which we believe is the key to both domestic and international economic growth Means that there are going to be foreign investors that there are going to be Excuse and distortions in the market, which are going to have to be in somewhere other regulated And where you put that balance is going to change over time It's going to change over the issue, but I absolutely would separate the real estate market and the problems particularly in london, which I accept From kind of financial services regulation Both of you linked Issues of of transparency and and political will Transparency Is expected to generate the political will to address the kinds of problems that we're we're talking about Um A company that reports no profits here where it's in business And enormous profits over here in a tax haven when it's not in business Where it's not in business. How do you justify that? How do you justify making? Showing no profit where you're in business and a lot of profit where you're not in business You do that with transparency enough and you will motivate civil society and tax collectors and parliamentarians to address that Kind of problem. So as I said this morning, there's a large Measure of advocacy that we put into our efforts Let me go a step further in the linkage between transparency and political will we are trying right now very hard To get included in the post 2015 Development goals I said this morning is called the millennium development goals the mdc's The next 15 years is usually being referred to as the sustainable development We are trying to get included in the next round of development goals a provision That commits all of us to cut Cut illicit financial flows arising from trade misinvoicing by 50 percent By the year 2030 we're trying to get that in We've had good reaction to people that are trying to be specific in the the next round of development goals And we've had less favorable reaction from those people who want to be as general as possible in the next round But we're we're trying very hard to do exactly that link these two things the requirement that the measure of Transparency and the political will To get it in there Make another comment about How you marshal political will Civil society organizations I think have been very effective quite effective in marshaling the political will to address these kinds of problems In the richer countries We've got the attention of the u.s. And the uk and germany and france and the nordic countries and so Politics in the richer countries is more often than not Issue In the poorer countries Politics is more often than not identity politics And it is somewhat more difficult to For civil society organizations advocacy organizations to have as big an impact in the poorer countries as we have in fact had in The richer countries. It's a longer process It takes longer in the poorer countries because the nature of politics is different. I hope i'm making sense here Politics is different It is not possible to take exactly the same kind of motivation the political will that we applied in the richer countries Take that and Lock stock and barrel and apply it to the poorer countries. It doesn't quite work You have to have a little bit different approach In the poorer countries because the nature of politics in poorer countries Difference than it does in the richer countries a country like brazil is sort of in In the middle where it is influenced by both Aspects of this both issue politics and identity politics, but I think the point that i'm that i'm really trying to convey here is that Repeat what i said earlier what we're talking about here is not that technically difficult It's a matter of political will but the political will has to be tailored to Where it is being applied you apply it in one way in the richer countries And you apply it in a different way in the poorer countries. I hope that makes sense So it makes sense to me at least So, uh, any more questions It's actually two comments and i since i have spoken before i shouldn't take too much time, but I just wanted to to make two points. I mean one one is that I think it was touched upon in the session we had earlier to some extent, but i think it's important to Retirate actually the point and that is that currently There is a major problem and it's linked to fragility of democracy actually as leonidus said in the last session And it is you know when we talk about regulation and that you were talking about the commentator here Also that it's about the regulator gaining the upper hand of being able to control the industry The problem i see currently however i mean you see it in the uk clearly you see it in norway as well everywhere really Is that i mean who is it who really influences the international accounting standards the standard in the financial industry Who is it who is provides most of the substantive inputs in consultation rounds In change of rules and also in terms of how what should be accepted practice No doubt it is the industry itself and this is linked again to the issue here or democracy i think here Really i mean governments and international organizations need to really step up and and and make some sort of a new dividing line I'm not saying of course that you should not have consultations You should not sort of hear from the industry, but clearly there's a crisis there And unless that somehow is tackled differently Some sort of you know that you construct some sort of not not barriers perhaps But some sort of separation of roles in a better way We are going to have a huge problem to really change The the current status of of how to really deal with illicit financial flows and tax evasion and um and tax Avoidance as well. That was the first comment. I wanted to make the second one. I think is When we talk about a lot of initiatives for increasing transparency I think we talk about transparency at different levels or certain or certain I would for example talk about EITI sort of a first level very basic But nevertheless very important Initiative I worked on the EITI throughout Africa and to some extent in Asia as well So I know it very well. It's very important. It can be hugely powerful, but it has big limitations as well Second level is a bit this sort of country by country reporting extended version All also also perhaps going into the The automatic exchange or the exchange arrangements that also will get to a certain point Third level perhaps that we haven't talked about that much. I think it's happening to some extent And I want to share with you because we worked on this from the Norwegian side in the few countries in Africa It didn't really go anywhere to be honest Yet, but that is to really put more much more of the emphasis on the companies Why are we all the time talking about? You know, we should be able to exchange between governments. Yes, that's important But why not put the own onus on the company? Why do we give a contract in the petroleum sector mining or a license to operate? You know without much stricter conditions in terms of documentation rules in terms of saying that Look, I mean if if you get a visit by the tax authority or another branch of the government These are the documents you are then obliged to provide to us if we need further documentation to be able to prove the trail of This cost you are claiming or this sale you are claiming It's your responsibility to give it to us Within certain time limits and you could even put punishment link to it if they don't provide it Why are we not talking about also putting the onus on the company to provide these things? Instead of saying, well, you know, maybe the government will ask it might get it or not It's actually possible to regulate and to make contracts in different ways Where you put much more of the emphasis on the companies to provide this This should become more and more the standard in a different way of organizing society. I think And I think it can be done. We did draft an example in Tanzania that was presented For political discussion. It has been launched for discussion under the AU as well in the in the corruption commission there Hasn't really gained much traction yet and Unless more countries pick it up and there is more sort of interest in it I don't think it will happen, but it is actually possible to put more of More emphasis on this. There is a social contract to some extent, you know between if you are a company operating in society I mean you you get you get the license to do a lot of things You should also then comply on your side in a different way than it is today Thank you. So any further I think we're approaching our deadline in terms that we still have our keynote speaker to Deliver the keynote speech, right? So, um, I hope that That you learned from this session I certainly did and I also hope it was an entertaining one. So thank you very much. Thank you for Your wisdom and I think we should move to the the final Part of the story and now I'll hand it to Christy to explain to us what we should do First thank you to the panel