The IMF and the World Bank are tasked with strengthening economic stability and development in emerging market nations where corruption is a serious issue. Both institutions have anti-corruption policies in place, but it is urgent that they pursue a far more forceful and effective plan.
Anti-corruption was not on the agenda 75 years ago, when the Bretton Woods conference led to the establishment of the sister organisations. Now it needs to be front and centre. This is a particularly good time for a fresh approach as new leaders take charge. David Malpass was appointed president of the World Bank in April, while the IMF will soon get a new leader after the resignation of its managing director, Christine Lagarde, who is expected to take the helm at the European Central Bank.
The scale of illicit financial flows poses a rising threat to global financial stability. In the past, the fund’s response has mostly been confined to providing technical assistance to central banks. Now, it needs to use its leverage to press national treasuries to be forceful in applying codes agreed by the Financial Action Task Force, the global standard-setter for rules on money laundering and terrorist finance. It must also push for transparency on the ownership of the millions of secretive companies registered in offshore financial centres, from the Channel Islands to the Caribbean tax havens.