The recent creation of a transatlantic group and other task forces to enforce sanctions against officials and elites close to the Russian government provides an opportunity to create an international system of financial transparency, according to a report by the Tax Justice Network. This transparency system, which could include a global asset registry, would go beyond the immediate crisis and remedy a current financial system that loses $483 billion a year to tax havens, the group said.
Alex Cobham, chief executive at the TJN, said in a statement that international efforts to impose Russian sanctions have hit the stumbling block of financial secrecy. Decades of "eyes-wide-shut regulations" are now making it nearly impossible for governments to track down the billions in assets held by sanctioned Russians, he said.
"But the newly announced task forces have the opportunity to put an end to the anonymous ownership of wealth, and the violence, corruption and tax abuse that financial secrecy drives all around the world," Cobham said.
In its report, the TJN outlined immediate and longer-term transparency measures, including how they would apply to efforts to enforce the sanctions. As a comprehensive measure, the group recommended the creation of national wealth registries that would ultimately contribute to a global asset registry.
The TJN's report echoed a statement from the Independent Commission for the Reform of International Corporate Taxation, which on Wednesday reiterated its long-standing calls for the creation of a global asset register to end wealth secrecy. The first step in making global wealth ownership more transparent could be Italian Prime Minister Mario Draghi's recent proposal for a public wealth registry of Russian elites with wealth above €10 million ($11 million), the group said.
José Antonio Ocampo, chair of the ICRICT and a professor at Columbia University, said in a statement that "too much wealth is owned through tax havens, through the use of bank accounts, companies and trusts that clearly aim to keep their final beneficiaries unidentifiable."
Ocampo added that a global financial registry of the real individual beneficiaries of these entities "would be a crucial measure to deal with illicit financial flows, including tax evasion and avoidance, money laundering and the financing of terrorism."
Draghi had proposed the public register of Russian elites' wealth as part of the transatlantic task force announced Feb. 26 by President Joe Biden and leaders from the European Commission, France, Germany, Italy, the U.K. and Canada. The task force is aimed at seizing the assets of sanctioned individuals and companies around the world as part of the international response to Russia's invasion of Ukraine, according to the U.S. Department of Justice.
Tommaso Faccio, the head of the secretariat of the ICRICT, said in a statement shared with Law360 on Thursday that the group has read that U.S. and Italian officials have been discussing Draghi's proposal and the officials said it could happen.
Mark Bou Mansour, the TJN's communications coordinator, told Law360 on Thursday that Draghi's proposal is a big step toward the creation of national wealth registries and ultimately a global registry.
He told Law360 that the proposal could help governments track down the Russian elites' assets as well as those held by organized crime, drug cartels and white collar criminals.
"We are seeing this vital transparency measure move from the fringes of transparency movements to the top of the global policy agenda," he said.
--Editing by Neil Cohen.
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