German fight against money laundering undermining Africa aspirations

A proposal helmed by Wolfgang Schäuble's finance ministry has been criticised for failing to put in place "true transparency". [European Council]

Germany is angling after a partnership with Africa as part of its presidency of the G20. But NGOs warn that Berlin’s fight against money laundering is undermining this goal. EURACTIV Germany reports.

On the German Ministry of Finance’s website, the G20’s Compact with Africa is awarded top billing: “The G20 acknowledges its special shared responsibility to meet the challenges facing the poorer countries, especially in Africa.”

The aim is to attract private investment to the African continent, under the coordination of Germany’s leadership, in order to promote growth and economic participation. Africa should be on the 20 most powerful economic nations’ radars more, according to Berlin.

But in the current debate about transparency registers and the fight against international money laundering, there are doubts about the seriousness of this goal.

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In tackling money laundering and tax havens, it has become clear, one year on from the Panama Papers scandal, that the German government’s efforts to help Africa’s poorest countries have barely got off the ground, warned ONE’s Franziska Perlick.

The billions in tax money lost to offshore accounts and through legal loopholes could help developing countries, she added. But a draft proposal adopted by German lawmakers does not go far enough toward creating true transparency.

A study by ONE found that poorer countries are deprived of some €750 billion a year as a result of money laundering, illegal trade and corruption.

That money is sorely needed to help people fight extreme poverty, hunger and disease and Perlick insists that that money would be available if it were not for tax havens.

The transparency register, which is meant to record who actually owns a company and to implement a European Union directive from 2015, will only be available to a select group of people, authorities and journalists after it was adopted by the German cabinet.

In the original draft put together by the finance ministry, this restriction was missing and it was envisaged that anyone would be able to gain access to the information on the register.

The Panama Papers last year revealed how closely interwoven international finance systems and corruption are. The leaks showed that banks, lawyers and financial advisers from developed countries were complicit and more than ready to help conceal illegal finances.

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Industrialised nations and, in particular, the German government could do plenty to “shine the light” on illegal financial practices, Perlick insisted. But the current draft of the legislation fails to do so.

Perlick added that the current proposal, which has since been criticised by the Federal Council, is not even a step in the right direction: “No, it’s pointless. There is no real transparency.”

She also sees a problem with the restriction that means only NGOs and journalists with a “legitimate interest”, as well as public authorities, would have access to the database.

“Who defines what a legitimate interest is? We are instead calling for every citizen in Europe and Africa to be granted access.” In countries where corruption has long afflicted regulatory bodies, public authorities have been unwilling to delve too deeply into problems.

So why has the German government amended this crucial part of the draft? “We are puzzled by that as well, especially since the federal government purports to want to shift the focus onto developing countries in order to improve their prospects,” Perlick said.

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