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Major banks facilitate corruption in world's poorest countries; government regulation is not working

By Global Witness | London, Mar 11 2009

As G20 finance ministers meet in London to discuss how to rescue the global financial system and prevent the next disaster, a new report by anti-corruption NGO Global Witness shows how some of the world’s biggest banks have been dealing with some of the world’s most corrupt regimes. 

By doing so they have facilitated corruption and looting of natural resource revenues, denying some of the world’s poorest people a chance to escape poverty.

‘The same lax regulation that created the credit crunch has let some of the world's biggest banks facilitate the looting of natural resource wealth from poor countries,’ said Gavin Hayman, Global Witness Campaigns Director. ‘If resources like oil, gas and minerals are to truly help lift Africa and other poor regions out of poverty, then governments must take responsibility to stop banks doing business with corrupt dictators and their families.’ 

The facts

Global Witness’s report, Undue Diligence: How banks do business with corrupt regimes, presents evidence that:

* Barclays kept open an account for the son of the dictator of oil-rich Equatorial Guinea long after clear evidence emerged that his family were heavily involved in substantial looting of state oil revenues.

* A British tax haven and a Hong Kong bank helped the son of the president of Republic of Congo, another oil-rich African country, spend hundreds of thousands of dollars of his country’s oil revenues on designer shopping sprees.

* Citibank facilitated the funding of two vicious civil wars in Sierra Leone and Liberia by enabling the warlord Charles Taylor, now on trial for war crimes in the Hague, to loot timber revenues.

* HSBC and Banco Santander hid behind bank secrecy laws in Luxembourg and Spain to frustrate US efforts to find out if Equatorial Guinea’s oil revenues had been looted and laundered.

* Deutsche Bank assisted the late president Niyazov of Turkmenistan, a notorious human rights abuser, to keep billions of dollars of state gas revenues under his personal control and off the national budget.

* Dozens of British, European and Chinese banks have provided Angola’s opaque national oil company, Sonangol, with billions of dollars of oil backed loans, though there is no transparency or democratic oversight about how these advances on the country's oil revenues are used, and they have a recent history mired in corruption and secret arms deals. 

What needs to be done

No bank should be, or should want to be, involved in business such as this, whose real costs are borne by the people of some of the world’s poorest countries.

Anti-money laundering laws require banks to do due diligence to identify their customer and turn down illicitly-acquired funds, but these laws need tightening to make them globally effective. The following four reforms to the financial regulatory system are essential:

* Banks must change their culture of ‘due diligence’ – the process by which they check that a customer is legitimate. This isn’t about box ticking. Banks should only take the business if they have identified an ultimate beneficiary who does not pose a corruption risk. Other business should be turned away.

* Governments must ensure that anti-money laundering laws in each jurisdiction are absolutely explicit that banks must do this due diligence properly, and financial regulators must actively enforce these laws.

* Cooperation between governments has to improve to ensure that national bank regulations become globally compatible, accountable and transparent, and are not hindered by bank secrecy laws. This must begin with reforms to the inter-governmental body that oversees the anti-money laundering regime, the Financial Action Task Force.

* Governments must ensure that new global rules are put in place to help banks avoid corrupt funds. The most important change is to ensure that every country produces full public online registers of the ultimate beneficial ownership of all companies and trusts under its jurisdiction, to help banks identify and avoid business with a corruption risk.

‘The G20 leaders must act on their promises to help the world's poor. A key element of making poverty history is to stop the money being stolen or kept off-budget in the first place. Ducking this issue now leaves the global financial system open not only to further corrupt money flows, but to the destabilising influences that have caused such damage to the developed world’s economies,’ said Hayman. ‘The developing world cannot afford a return to business as usual.’


Anthea Lawson

Copies of the report can be downloaded from For more information and interviews, call:

In the UK

 +44 (0)20 7561 6382,  +44 (0)20 7561 636

In the US

+1 202 380 3583    or    +1 202 725 8705   

Global Witness exposes the corrupt exploitation of natural resources and international trade systems to drive campaigns that end impunity, resource-linked conflict, and human rights and environmental abuses. Global Witness was co-nominated for the 2003 Nobel Peace Prize for its leading work on conflict diamonds and awarded the 2007 Commitment to Development Ideas in Action Award, sponsored jointly by Washington DC based Center for Global Development and Foreign Policy magazine. For more information, please see

Global Witness Website

Barclays is a major global financial services provider engaged in retail and commercial banking, credit cards, investment banking, wealth management and investment management…
Deutsche Bank
Deutsche Bank was founded in 1870 and is a leading global investment bank. It has operations throughout the world and has a strong presence in Germany and Europe. The bank´s…
Headquartered in London, HSBC is one of the largest banking and financial services organisations in the world. HSBC operates from around 6,100 offices in 72 countries and…
Banco Santandar S.A., founded in 1857 in Santander, Spain. The group has expanded since 2000 through a number of acquisitions, with operations across Europe, Latin America,…

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