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Transparency International Petitions G20 on Financial Reform

On January 3rd, Transparency International issued a letter to the G-20 commending them on the continuing work they have been doing on a comprehensive Anti-Corruption Action Plan. They specifically linked the attainment of the Millennium Development Goals (MDGs) to progress in this area. They note the need for milestones and timeframes for action by the member nations of the G-20. Further, they made specific recommendations regarding the ongoing design and implementation of United Nations Convention Against Corruption (UNCAC). Of special concern were the following:

  • foreign bribery,
  • anti-money laundering,
  • asset recovery,
  • extradition,
  • access to information,
  • civil society participation, and
  • whistleblower protection.

In addition to the work outlined in the Anti-Corruption Action Plan, they noted that they continue to be highly concerned about the stability of the international financial system. They are seeking recognition by the G20 that its further actions on strengthening global regulation and supervision are based on the principles of transparency, accountability and integrity.

Their specific recommendations are as follows:

  • Advise the Financial Stability Board (FSB) to publish a schedule for single-country reviews on adherence to international regulatory and prudential standards and other regulatory initiatives as well as the resulting reports together with recommendations for concrete action plans in order to ensure country compliance; FSB reports on thematic peer reviews should include more information on the status of implementation of reforms at country level.
  • Ensure publication of the findings of all Early Warning Exercises.
  • Mandate enhanced transparency of Supervisory Colleges, including for which institutions and how they have been formed as well as public reporting on their activities.
  • Oblige supervisory authorities to regularly report on the condition of institutions that pose systemic risks because of their size or leverage.
  • Ensure mandatory bank reporting -at a minimum on an annual basis- to their shareholders regarding measures adopted or in process to strengthen risk management at the executive level along with board governance of all aspects of risk management.
  • Introduce concrete and more rigorous regulation of hedge funds which receive funds as well as services from banks in G20 countries or operate in G20 countries, including the obligation to publish their rationale for registering offshore; this regulation can be enforced through the bank oversight entities of G20 countries.
  • Require financial services firms to publicly report on their lobbying activities.

We have all seen the havoc in the international financial system as a result of the financial crisis of 2008. These recommendations are sound and should be advanced both by the individual G-20 nations, and as a united front within the UN. As the UNCAC working group proceeds we hope that they carefully craft the Convention to account for these more systemic considerations. Transparency in financial sector actions is critical for the long-term stability of the global economy.