Round-Up of Financial Crime, Corruption and Terrorism Initiatives at the G20 Osaka Summit
Denisse Rudich, Director, London office of the G7 and G20 Research Groups
August 24, 2019
Only seven months have passed since the last G20 leaders' summit in Buenos Aires, Argentina. With geopolitics in a bit of a state and much uncertainty about trade, expectations were low that the G20 summit held on 28 to 29 June 2019 could deliver in other policy areas — which it did. Here is a summary of key initiatives made in financial crime, corruption and terrorism at the G20 Osaka Summit.
Regarding financial crime, the G20 predominantly focused on addressing innovation in technology and the role of the Financial Action Task Force (FATF), the global standard setter in anti-money laundering (AML) and counter-terrorist financing (CTF). Recognizing the benefits that innovations such as crypto-assets and decentralized technology can deliver to the financial system and broader economy, the G20 indicated that they will continue to monitor developments and "remain vigilant to existing and emerging risks." The declaration highlighted, however, that crypto-assets do not currently pose a threat to global financial stability. Leaders further reaffirmed their commitment to applying the recently updated FATF Standards for AML/CTF to virtual assets, crypto-assets and virtual assets service providers.
With regards to global governance in this space, leaders welcomed the United Nations Security Council Resolution 2462 recognizing the essential role of the FATF as a global standard setter and reiterated their "strong commitment to step up efforts to fight these threats, including by strengthening the FATF's global network of regional bodies." The G20 called for the full, effective and swift implementation of the FATF Standards. Given the language around FATF-style regional bodies, this was likely aimed at non-G20 members as well.
The G20 declaration further touched upon one of the key unintended consequences of financial crime prevention and AML compliance: de-risking. De-risking is the process whereby established financial institutions withdraw or do not offer bank accounts, correspondent banking and other financial services to groups of clients in countries or industries perceived to pose a higher risk of money laundering or terrorist financing. G20 leaders indicated that they will "continue to monitor and address the causes and consequences of the withdrawal of correspondent banking relationships." They further welcomed the participation of the private sector in developing sustainable finance solutions and strengthening financial inclusion as well as promoting transparency.
Also relevant given the impact on global finance and the fact that technology is used to further financial crime, cyber security was discussed through the lens of innovation giving rise to cybercrime and hacks. G20 leaders, recognizing the need to promote security in the digital economy and addressing security gaps and vulnerabilities, praised the value of ongoing discussions on security in the digital economy. Leaders further indicated that they would to continue to step up efforts to enhance cyber resilience.
On corruption, the G20 leaders remain committed to playing a leading role in global efforts to fight against corruption and promote integrity, specifically through the implementation of the G20 Anti-Corruption Action Plan 2019-2021 "while strengthening synergies among related international instruments and mechanisms." This includes by:
Leaders committed to intensify efforts to "continue practical cooperation" on the denial of safe haven to persons sought for corruption and the proceeds of corruption and on asset recovery. The G20 further pledged to intensify efforts to combat foreign bribery and to ensure that each G20 country has a national law in force for criminalizing foreign bribery as soon as possible.
With regards to future areas of focus, G20 leaders indicates that they look forward to the scoping paper on "international cooperation dealing with serious economic offenders and recovery of stolen assets" and welcomed the work on identifying linkages between corruption and gender.
An entire document was dedicated to terrorism: the G20 Osaka Leaders' Statement on Preventing Exploitation of the Internet for Terrorism and Violent Extremism Conducive to Terrorism (VECT). The document, a response to the livestream of the Christchurch terrorist attacks and other atrocities, addressed the exploitation of the internet to advance terrorist causes. G20 leaders reaffirmed their commitment to "act to protect our people from terrorist and VECT exploitation of the internet," stressing that they expect online platforms to do their part. They further committed to continue working together to tackle this challenge and to collaborate with other states, international organisations, industry and civil society.
Leaders stated that they to must fully implement relevant international instruments including the UN Global Counter Terrorism Strategy and other instruments and also the 2017 Hamburg G20 Leaders' Statement on Countering Terrorism.
While indicating that the G20 remains committed to an open, free and secure internet, they emphasized that the internet "must not be a safe haven for terrorists to recruit, incite or prepare terrorist acts." The G20 urged online platforms to adhere to the principle that the rule of law applies online as it does offline, to protect their users, and mitigate the proliferation of terrorism and VECT content. This includes by having online platforms providers:
G20 leaders acknowledged the ongoing work of the Global Internet Forum to Counter Terrorism (GIFCT), citing the need for urgent action. Leaders encouraged the GIFCT to expand its membership to be more inclusive and to collaborate with industry, media outlets, researchers and civil society. The G20 indicated that "a strengthened GIFCT would enhance cross-industry understanding, collaboration and the capability of big and small companies to prevent terrorist and VECT exploitation of their platforms."
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Denisse Rudich is director of the G20 and G7 Research Groups (London) and a financial crime prevention specialist in policy development, strategic advisory and risk management. She has experience in setting up global frameworks in the investment and wholesale banking sectors, advising regulators, government and emerging fintech/regtech firms, and supporting forensic investigations in both the public and private sectors. Denisse is involved in several global initiatives aimed at building effectiveness and collaboration in the fight against financial crime, including as senior advisor to The Sentry.
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