PANAMA CITY/ GENEVA (10 May 2017) – Panama’s agenda of reforms should now focus on fighting tax evasion and a better regulation of the banking industry in this area, said today the United Nations Independent Expert on foreign debt and human rights, Juan Pablo Bohoslavsky.
“The main component of illicit financial flows globally is tax fraud. These funds, which circulate through and are deposited in the shadows of the financial and corporate system, consolidate poverty and inequality in the world,” said the expert at a press conference in which he presented the
preliminary conclusions of his first official visit to the country.
Mr. Bohoslavsky acknowledged the important progress made by Panamanian authorities by strengthening financial and corporate transparency, and noted that “Panama now has a more robust regulatory system compared to some years ago, which includes increased international cooperation on this matter.”
However, the expert made a series of recommendations to deepen the fight against tax evasion as well as to improve banking regulation in this area.
“The heaviest tax evasions must be severely punished within the framework of a comprehensive strategy aiming at covering all the dimensions of tax fraud,” he said. “‘Know your client’ should include the obligation of financial and non-financial entities to report suspicious transactions, also linked to tax evasion,” Mr. Bohoslavsky added.
The expert called on Panama to impose greater due-diligence duties on financial and banking institutions “so that they prevent and denounce tax fraud, rather than facilitating or profiting from it.” He further recommended the adoption of clear legislation “to prevent conflicts of interest of public officials and to ensure the autonomy of regulatory bodies.”
“Reducing the fiscal financial opacity at the global level is a challenge that involves the concerted commitment of all States, not just of Panama,” Mr. Bohoslavsky said. “Every country in the world must undertake serious and tangible efforts in order to reduce illicit financial flows.”
In this regard, the expert underscored that the 2030 Agenda for Sustainable Development includes a specific goal in this direction. Reducing illicit financial flows is also clearly connected with the goal of reduction of poverty and social inequality within and between countries: “This includes the duty for all States to exchange tax information with each other in good faith.”
“Panama has experienced an impressive growth in the last decade, but, it continues to have high levels of inequality, especially in rural areas and
comarcas, where indigenous peoples live,” the expert said.
“Tax policy as well as budget planning and execution must be rationalized in order to ensure the sustainable enjoyment of economic, social and cultural rights, especially by those excluded from the benefits of the great economic growth of recent years,” Mr. Bohoslavsky noted.
In closing, he reminded Panamanian authorities and private and public lenders that infrastructure projects should be designed and implemented within a human rights framework, including the principle of free, prior and informed consent of all persons to be impacted, especially indigenous peoples.
The Independent Expert, who visited the country from 2 to10 May invited by the Government of Panama, met with senior officials including ministers, regulators and prosecutors. He also met with representatives of international financial institutions, indigenous and civil society, trade unions, law firms, and scholars.
His final conclusions and recommendations will be presented in a report to the UN Human Rights Council in Geneva in March 2018.
Mr. Juan Pablo Bohoslavsky (Argentina) was appointed as
Independent Expert on the effects of foreign debt and human rights by the United Nations Human Rights Council on 8 May 2014. Before, he worked as a Sovereign Debt Expert for the United Nations Conference on Trade and Development (UNCTAD) where he coordinated an Expert Group on Responsible Sovereign Lending and Borrowing. His mandate covers all countries and has most recently been renewed by Human Rights Council resolution 34/3.
The Special Rapporteurs are part of what is known as the
Special Procedures of the Human Rights Council. Special Procedures, the largest body of independent experts in the UN Human Rights system, is the general name of the Council’s independent fact-finding and monitoring mechanisms that address either specific country situations or thematic issues in all parts of the world. Special Procedures’ experts work on a voluntary basis; they are not UN staff and do not receive a salary for their work. They are independent from any government or organization and serve in their individual capacity.
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