Analytical Studies > Analysis on the 2021 Cornwall Summit
G7 Summits > 2021 Cornwall Summit

The G7 Must Step Up Its Fight against Illicit Financial Flows

Denisse Rudich, G7 Research Group London
June 15, 2021

Where money flows, illicit finance follows. The G7 must step up its fight against corruption and illicit financial flows. At the G7 summit in Cornwall, G7 leaders committed billions of dollars to building health structures for pandemic preparedness and to tackle COVID-19, to promoting green finance and biodiversity to address climate change, and to giving developing countries an alternative to China's Belt and Roads Initiative by announcing the Build Back Better for the World (B3W) framework, a $100+ billion infrastructure project that promotes western values of democracy, human rights, labour rights and transparency. However, they made very few references to taking measures to tackle illicit financial flows and corruption, which are deterrents against the misappropriation of state funds, money laundering and grand scale corruption involving vast quantities of assets – key threats to their worthwhile initiatives.

What They Did Say

In the section on Global Responsibility and International Action of the Carbis Bay G7 Summit Communique, the leaders "recognise[d] the need for action on corruption, including by sharing information on illicit financial activities, tackling the misuse of shell companies, and curtailing the ability of illicit actors to hide wealth, including in real estate." This is the first time G7 leaders referred to real estate used to launder the proceeds of crime. It remains to be seen what steps countries will take to tackle the use of land and property for money laundering. There were, however, many references to upholding human rights throughout the communiqué and to condemn forced labour, which could lead to a call for human rights due diligence and modern slavery due diligence in global supply chains.

Other G7 documents, such as the G7 2030 Nature Compact and 2021 Open Societies Statement, included slightly more substantial references to illicit financial flows.

In the Nature Compact, G7 leaders mentioned the possibility of introducing due diligence requirements to tackle deforestation and forest degradation in the supply chain. The G7 further committed to "stepping up efforts" to tackle environmental crimes including by:

Recognizing and tackling "the illegal wildlife trade (IWT) as serious organised crimes";
Intensifying the fight against IWT-driven money laundering;
Strengthening beneficial ownership registries, "noting the benefits of making beneficial ownership information public where possible"; and
Reporting on progress on the Financial Action Task Force's actions to identify, assess and address money laundering risks relating to IWT at the meeting of interior ministers to be held in September.

The Open Societies Statement emphasized "the rule of law and effective, independent and impartial judicial systems free from corrupt influence or coercion." It included a commitment to "prevent and tackle corruption and illicit financial flows and promote integrity, transparency and accountability."

Where That Might Lead

Although the Carbis Bay communiqué did not directly link geopolitical issues to sanctions breaches as a source of illicit financial flows, it contained several country-specific statements that could indicate future consideration of the use of human rights and other sanctions measures. These include:

Condemning China's actions and human rights violations in Xinjiang and Hong Kong;
Calling on Russia to explain the use of chemical weapons, end crackdowns on civil society and media, and disrupt and hold accountable persons responsible for ransomware attacks, abuse of virtual currencies to launder ransoms and other cybercrimes,
Coordinating sanctions against Belarus to hold its leaders to account for the forced landing of flight FR4978 and subsequent arrests of a journalist,
Condemning atrocities in Ethiopia, including sexual violence, and calling for accountability for human rights violations in Tigray,
Expressing concern about the attacks against civilians in the Sahel and the existing humanitarian crisis and human rights violations,
Reiterating the need for a civilian-led transition to democratic rule in Chad and Mali;
Reiterating the need to implement the ceasefire agreement in Libya, including the departure of foreign fighters and mercenaries;
Calling on parties in Afghanistan to stop the violence and take steps for a ceasefire and to engage in the peace process;
Calling for the "denuclearisation of the Korean peninsula and the verifiable and irreversible abandonment of the Democratic People's Republic of Korea's (DPRK) unlawful weapons of mass destruction and ballistic missile programmes in accordance with all relevant UN Security Council resolutions";
Condemning the military coup in Myanmar and calling for the release of persons detained arbitrarily;
Committing to ensure that Iran "will never develop a nuclear weapon" and welcoming discussions under the Joint Comprehensive Plan of Action with the US back in the fold.

It remains to be seen what type of coordinated actions G7 members will take in and against these countries to drive forward change.

What Next

Illicit financial flows and corruption are expected to be addressed further at the G7 interior ministers meeting, which could account for the G7 leaders' seemingly light touch on these matters at Cornwall. The G7 indicated that it would build on these various initiatives at the G20 and other multilateral forums, including the US-hosted Summit of Democracy and the United Nations. It is possible that the G7 at Cornwall has set in motion a new way to address illicit finance and predicate crimes, including corruption, are addressed at high-level gatherings.

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	Please send comments to: g7@utoronto.ca This page was last updated June 15, 2021.