– As delivered –
Statement by H.E. Mrs. María Fernanda Espinosa Garcés, President of the 73rd Session of the UN General Assembly
16 May 2019
Ambassador Rhonda King, President of the Economic and Social Council,
Permanent Representatives, Delegates,
Excellencies, Ladies and Gentlemen:
I am pleased to welcome you to this high level meeting, the third one in this “Prosperity Week”, which started on Tuesday with the event on Inclusive Development and Inequality and continued yesterday with the Dialogue on Commodities.
As was the case in these events, the topic that gathers us today has a clear connection with sustainable development and, therefore, will contribute to the preparation process of the events on September of this year, particularly for the High Level Political Forum Summit; the High Level Dialogue on Financing for Development and the review meetings for the Programs of the Small Island and Landlocked Developing States.
Illicit financial flows are corrosive for the acting capabilities of the States and, therefore, have an impact on the lives of millions of people all over the world. The resources that are diverted through these flows mean less money to invest in health, infrastructure, education and housing, that is, in the wellbeing of the peoples we represent. Furthermore, illicit financial flows worsen the deficit of financing for development, since they limit the mobilization of national resources.
Due to the diversity of the stakeholders involved -governments, the private sector, international financial institutions, transnational organized crime and others-, addressing this issue is extremely complex. Nevertheless, we are here with a good disposition to dialogue and devise effective strategies to face a scourge that affects all countries and contributes to inequality between and within our countries.
I would like to stress that multilateralism is an adequate and indispensable tool to respond to all the challenges associated to illicit financial flows. This has been proven with the two great transformative Agendas we adopted in 2015 –the Agenda 2030 and the Addis Ababa Agenda-, in which we committed to double our efforts to substantially reduce illicit financial flows, with the final objective of eliminating them. Now, we must absolutely identify and apply the right measures. Now it is time to be decisive and act.
Allow me to refer to three aspects.
First, we must combat the sources of illicit financial flows and to do so, we need political will.
Illicit financial flows are the result and the escape-way of criminal activities, tax evasion, corruption and other “immoral” sources that undermine the economic, social and political stability of the States, particularly in developing countries.
The losses caused by tax evasion and avoidance are incalculable and jeopardize the development and well-being of future generations. The lack of adequate tax policies has allowed persons and corporations to evade taxes through various strategies. In Latin America and the Caribbean, for example, calculations indicate that tax evasion and avoidance in personal and company income taxes cost more than 220.000 million USD in 2015, which represents 4,3% of the regional GDP, according to the Economic Commission for Latin America and the Caribbean, ECLAC.
It is imperative to implement effective tax policies to further strengthen international tax cooperation. Only then will we be able to create the conditions necessary to mobilize more resources.
In that same sense, we must adopt and apply policies that can combat corruption, at all levels. As long as the distribution of incomes and the decisions on public expenditures are distorted due to corruption, we will not be able to eradicate poverty or reduce inequalities.
Corruption and its interdependence with illicit financial flows undermine the prosperity of our peoples. That is why strengthening our regulatory frameworks and focusing on transparency and accountability in the government sector, financial institutions in general and the private sector, is fundamental.
In this sense, I highlight the need to make better use of the existing regulatory frameworks and conventions, including the United Nations Convention against Corruption, to address illicit financial flows and asset return. This will strengthen international cooperation on this issue.
Corruption and its interdependence with illicit financial flows undermine the prosperity of our peoples. That is why strengthening our regulatory frameworks and focusing on transparency and accountability in the government sector, financial institutions in general and the private sector, is fundamental.María Fernanda Espinosa Garcés
This leads me to my second point: to combat illicit financial flows, we must focus on their sources and also on their destinations and in the damages they cause.
We must stop these flows with concrete measures and the recipients must stop receiving those assets. We must deter, detect, prevent and fight.
Illicit financial flows often operate in a cross-border manner and therefore they operate under various domestic legal systems that can present differences. Hence, implementing and enforcing the existing regulations to identify the final proprietors of the assets is fundamental.
Exchanging tax information is crucial to prevent the concealment of ill-gotten resources. We must strengthen our efforts, for example, in Africa, the region with the fastest growth of illicit financial flows, whose representation in the GDP is of up to 5,7%.
Thirdly, we must recover and return the stolen assets.
And to do so, international cooperation is essential since a few of the main challenges are: the different legal systems, the complexity of the investigation and multi-jurisdictional processes.
It is important to be aware that the vast majority of the resources arising from corruption are yet to be returned to their countries of origin. We must aim our efforts to reduce the processes and the costs of asset return to the minimum and eliminate the administrative and legal bottlenecks involved in these processes.
We will address this topic in today’s panels. We will also get to know the lessons learned and the main challenges that are yet to be addressed regarding asset return and its impact on sustainable development. Furthermore, we will have the opportunity to share our points of view on how to accelerate the efforts to create an inclusive and effective global architecture to combat illicit financial flows and the role of the United Nations to facilitate multilateral and international cooperation.
I would like to acknowledge the role of civil society in the inclusion of illicit financial flows and asset return in the international agenda. Their proposals have positively contributed to the intergovernmental processes related to this issue, mainly in the 2030 Agenda and the Addis Ababa Action Agenda.
I am certain that the panelists and moderators who will participate in today’s meeting will provide us with information that will be very useful in our deliberations and how we address this issue in the next session.
Succeeding in addressing illicit financial flows benefits all of us, but failing to do so is more harmful for the poorest and most vulnerable persons. I trust our collective determination to end this scourge will be demonstrated once again today and will be strengthened with our deliberations.