Over the past few years, StAR has highlighted the rise in corruption across the globe, and the uncovering and development of large-scale cases on nearly every continent. This trend has not always seen a comparable impetus by governments to address issues related to corruption within and without their jurisdictions. As noted in the 2018 StAR annual report, there was a surge in governments’ desire to counter corruption however last year’s StAR report addressed the widening of the gap between setbacks and gains in anti-corruption work.
Despite these ebbs and flows, governments have been on the quest for developing appropriate legislation, implementing the correct tools, and engaging constructively in order to address the loopholes that allow for such corruption cases to arise. The emergence of COVID-19 and its continued trajectory have raised concerns amongst experts regarding its effect on the levels of corruption.
To that end, the World Bank launched a flagship report on anti-corruption titled Enhancing Government Effectiveness and Transparency: The Fight Against Corruption in September in order to provide a fresh perspective on the current situation as it pertains to tackling corruption and how countries are attempting to address the impediments it places on development. StAR experts contributed both to the peer review and the substance of the report, notably on financial disclosure and beneficial ownership.
The asset and interest declaration chapter provides substantive feedback on best practices and guidelines for practitioners seeking to implement effective and transparent declaration systems. The report offers case studies from Ukraine and Romania which provide examples of the type of impact these systems can have, and the progress and challenges related to such developments.
StAR and World Bank research shows that asset and interest disclosures of public officials have become a universal tool to enhance public sector transparency and accountability, promote integrity and prevent corruption. National disclosure systems have different scope and reach, level of transparency, institutional setups, technological capacities and verification methods. However, the general trend is that systems are becoming more sophisticated; transitioning to digital platforms for submission and verification and incorporating centralized collection and analysis of declarations by dedicated staff or specialized agencies. Countries tend to create or shift to multi-purpose systems which target both interests and wealth of public officials.
The case studies included in the World Bank report show how a robust asset and interest disclosure system may have a spillover effect and push forward digital governance and an open data agenda, promote civil society watchdog activities, support anti-money laundering efforts and ownership transparency. The case studies also show that the greatest impact can be achieved through a comprehensive approach that focuses both on prevention and on sanctioning. The case of Romania also points to the direct role that asset declarations can play in asset recovery through the confiscation of unjustified variations of wealth. However, most asset declaration and interest disclosure systems have yet to live up to their potential and the report provides guidance on how to improve existing frameworks and make them relevant in the context of transnational financial flows, new ways of disguising unjustified wealth, as well as domestic typologies of conflict of interest and hidden wealth.
One of the key obstacles to tracing and recovering illicit gains from corruption is a lack of corporate transparency: during corruption investigations, investigators often must first uncover who actually benefits from the ownership of an asset – for example a company or real estate that is involved in a corrupt scheme – since the beneficial owner may be hidden behind multiple layers of shell companies or behind a nominee company director. Implementing an effective beneficial ownership disclosure poses significant challenges, and most countries are struggling to implement FATF Standards on beneficial ownership transparency.1 The chapter on beneficial ownership transparency in the report provides an introduction to the concept, describes different approaches to collecting and maintaining information, and charts growing commitments by governments towards beneficial ownership transparency. It presents three case studies from Nigeria, Slovakia, and the United Kingdom to illustrate how governments have tackled some of the common challenges.
Slovakia has adopted a noteworthy approach that focuses on high-risk sectors for public corruption and conflicts of interest. A 2017 law requires companies that wish to bid on government contracts, receive EU funds, or apply for an extractive license to register in a specially created registry for “Partners of the Public Sector”. This registry is publicly accessible and contains information on beneficial owners of the listed companies – but information cannot be self-reported by the company. Only an authorized professional intermediary (such as an attorney, notary, bank, or tax advisor) can report information to the registry. The intermediary has a professional duty to verify the information and is jointly liable for the accuracy of the disclosure. The registry is administered by a District Court and there is a system in place for anyone to submit challenges to the accuracy of the information in the registry. Reasonable queries can lead to investigations conducted by the Court during which the burden of proof for establishing that the reported information is correct is shifted to the company; it is not up to the Court or the person who submitted the complaint to prove that information is inaccurate. The Slovak framework combines a number of promising elements: 1) it represents a targeted risk-based focus on specific sectors with a high corruption risk, 2) it addresses the challenge of verification of beneficial ownership information through enlisting intermediaries in “gatekeeper” professions in the fight against corruption, 3) it integrates a system for reporting discrepancies in registry information that is overseen by a Court which, if administered fairly, contributes public trust in the accuracy of the information.
During the launch event, the Executive Director of the United Nations Office on Drugs and Crime (UNODC), Ghada Waly, highlighted the joint work of the World Bank and UNODC through StAR, and its focus on ending safe havens and asset recovery. In addition, Delia Ferreira Rubi, the head of Transparency International Global stressed the need to build partnerships with the private as well as public sector due to the important role both play in asset recovery and fighting corruption. She highlighted the issues associated with gatekeepers becoming enablers of corruption, and the lack of accountability in beneficial ownership transparency which still requires a lot of work on verification and disclosure of and she further underscored the role civil society organizations play in ensuring accountability and transparency. A full recording of the launch can be found here in addition to a blog by Mari Pangestu, Managing Director of Development Policy and Partnerships at the World Bank highlighting the need for stronger partnerships to fight corruption.
 According to an analysis of compliance in the 4th round of FATF and FATF-style regional bodies (FSRB) mutual evaluations, 90% of assessed countries were rated as having either low or moderate effectiveness and not a single country achieved a high level of effectiveness. For technical compliance, 58% of FATF members and 70% of members of FATF’s regional bodies (FSRBs) were rated either non-compliant or partially compliant with Recommendation 24.
Ghada Waly, Executive Director of the United Nations Office on Drugs and Crime (UNODC) at the online launch of World Bank Anti-Corruption Report, September 2020