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WASHINGTON DC / OSLO, May 6 (IPS) - A conversation with Toril-Iren Pedersen, Director of the UNDP Global Policy Centre for Governance, and Michael Jarvis, Executive Director of the Trust, Accountability, and Inclusion (TAI) Collaborative
Q1: What is financial integrity and why is it important right now? Why is it relevant to TAI’s members?
Toril-Iren PedersenToril-Iren Pedersen: Financial integrity is about ensuring that the financial system operates transparently and accountably, and that economic and financial activity follows both the letter and spirit of legitimate rules and standards. It also means ensuring that those systems contribute to sustainable development.
For us, the issue is not limited to one category of wrongdoing. It is about the connection between different parts of economic value, from public revenues to criminal flows, and the loopholes that exist within the regular financial system. Financial integrity cannot be considered in isolation. Weaknesses across tax, corruption, anti-money laundering and the broader global financial architecture all have to be understood together.
Michael Jarvis: At TAI, we see financial integrity as the need for systems to operate transparently, accountably and ethically. That is how people ideally manage their personal finances, and how we hope corporations run their businesses. But we are especially focused on governments and countries: how they strengthen the integrity of their financial systems, minimize corruption, encourage fairness and better steward public resources.
There is a clear development case for why this matters. TAI’s members are primarily U.S.-based philanthropies working internationally, and our work is organized around three priorities: strengthening healthy democracies, advancing climate accountability and improving fiscal accountability through fair and effective financial governance. Financial integrity underpins all three. Without it, progress in each area is weakened.
Michael JarvisThere is also real urgency. Economic crime is increasingly transnational and has expanded rapidly, in part because of new technologies. A recent NASDAQ Verafin report estimated global financial crime at $4.4 trillion. UN research has found that illicit financial flows cost Africa at least $50 billion a year. These are resources that countries should be able to use for development priorities such as education, health systems and environmental protection.
When financial systems lack integrity, the damage is broad. It undermines trust in government, contributes to democratic disillusionment and weakens citizens’ confidence that public resources are being used fairly. It can also slow the energy transition, as we have seen with concerns around carbon markets. And it directly affects the ability of governments to raise and spend revenue effectively.
Toril-Iren Pedersen: I would add that declining trust in governments and in the multilateral system is higher than we have seen in a very long time. Lack of financial integrity contributes directly to that distrust.
Visible wealth inequality is one challenge, but so is the perception of invisible wealth being accumulated through the global financial architecture. When people sense that wealth is moving in the shadows, outside transparency and democratic control, it creates legitimate grounds for distrust. That is why lack of financial integrity must be understood as a systems failure that requires a systems approach.
Michael Jarvis: That is also the focus of the new paper from your team, the UNDP Global Policy Centre for Governance, which TAI supported. It emphasizes why progress requires action on multiple fronts and why no single actor or institution can solve this alone. Financial integrity is a collective action challenge.
Q2: How has UNDP’s Global Policy Centre for Governance worked on financial integrity over the past few years? What were your most important results and insights?
Toril-Iren Pedersen: The Centre’s work has taken place across several streams, but the most important contribution has been analyzing the system and the relationships among different actors. When we look at corruption and illicit financial flows, we have to ask who enables those flows within countries and across borders. Understanding those relationships is central to financial integrity.
The Centre has also convened actors within the UN and among practitioners, including country representatives involved in the Financing for Development negotiations in Sevilla last summer. That process helped produce stronger commitments to curb illicit financial flows and introduced more substantive language on financial integrity and corruption than we had seen in earlier iterations of the Financing for Development agenda.
The analytical work on the financial integrity ecosystem and the systems approach has also been developed in collaboration with several TAI members, including the MacArthur Foundation and Ford Foundation. Their support has been important both substantively and financially.
Q3: How will the Centre work on financial integrity going forward, under your leadership?
Toril-Iren Pedersen: The Centre has worked on a range of governance frontier issues. Going forward, we will focus on two areas: financial integrity, and data systems and data availability at the country level. The data agenda connects directly to financial integrity, but it also has broader relevance.
On financial integrity, we see a need to problem-solve the systemic challenges that are preventing progress at both the country and global levels. We will continue analyzing what is stopping countries from making substantive progress and what kinds of solutions and policy alternatives can be made available to them.
Some of these solutions already exist, but they are not always accessible. As a UNDP Policy Centre, our role is to make research, policy options and insights into systemic challenges available to UNDP country offices so they can be integrated into country-level programming. We also hope this work will help countries engage more effectively in global processes.
There is currently a disconnect. The Financial Action Task Force, the OECD tax framework and anti-corruption frameworks all rely on data from countries, but they do not always help solve what is fundamentally a systems challenge. We will continue engaging in those processes while breaking the work into more manageable areas where countries can take action nationally, regionally and globally.
Q4: What is the role of philanthropy in strengthening financial integrity against the backdrop of a fast-evolving global development landscape? What collaboration opportunities do you see between philanthropies, multilateral organizations and other stakeholders?
Michael Jarvis: Philanthropy’s role is a nimble one. The volume of finance philanthropy brings is not the same as government donors or what countries can mobilize themselves. The question is how philanthropy can prompt the right conversations and support work that moves the agenda more effectively.
Traditionally, philanthropy has supported civil society groups, independent media and think tanks at the global and national levels. Those actors investigate financial integrity issues, build evidence, raise public awareness and develop policy recommendations for governments and multilateral forums.
Philanthropy also has limits. Individual donors, including TAI members, often focus on a relatively small number of priority countries. They are not operating at a scale that covers all countries affected by these issues. That is where the UN system and international financial institutions can play a different role, because they work with nearly every country and have government relationships built into their mandates.
There are important complementarities. The MacArthur Foundation, for example, has made a major investment in Nigeria around financial integrity and anti-corruption, working with government agencies while also supporting civil society and media. More broadly, different actors bring different relationships, mandates and capacities.
The Financing for Development process in Sevilla is a good example. The outcome was stronger because many players were involved, from civil society groups working in-country to global and regional convenings that reinforced the message. Those efforts helped shape the negotiations and elevate financial integrity on the agenda.
An important opportunity is the Illicit Finance Summit, being hosted by the UK Government in June. It can bring together governments committed to addressing financial integrity challenges and create space for civil society, academia, philanthropy and others to develop practical solutions. Philanthropy should be part of that conversation and think about where its support can amplify or pilot ideas that emerge.
Visibility also matters because it helps attract resources. Funding for financial integrity work remains very limited. In a 2023 analysis, TAI estimated that about $150 million had been directed to illicit financial flows work since 2020, including efforts to address tax avoidance.
That averages roughly $30 million a year across different groups, countries and sectors. Compared with the scale of the problem, and compared with funding for fields such as climate or AI, that is extremely small.
The upcoming summit could serve as a call to action for philanthropy and other funders to invest more. The rise in fraud enabled by crypto and other technologies affects people directly and is creating grassroots demand for action. Partnership will be essential, including with UNDP, the World Bank, national governments, civil society and research networks.
Toril-Iren Pedersen: I agree. We need to mobilize more resources, but it is also important to recognize what has already been achieved with limited funding. Much of the momentum for change over the past 10 to 15 years has come from civil society organizations, journalist networks and collaborative investigations around leaks. Those efforts helped put issues such as tax fairness, transparency and beneficial ownership on national and global agendas.
This field has shown that limited resources can have an outsized effect when actors from different parts of the ecosystem work together. Anti-corruption, tax fairness and anti-money laundering were once treated as separate silos. Bringing those communities together around shared solutions is a cost-effective way of working.
Going forward, we also need to connect financial integrity to other development priorities, including climate finance and health financing. Each sector has its own financial integrity challenges. With the current development financing crunch, we cannot afford to leave money on the table, and we cannot afford to let resources disappear when policy action could prevent it.
Q5: Is there a case for involving the business community? What would the message be?
Toril-Iren Pedersen: Yes. Governance investments are one area we will be looking at closely. There is enormous pressure to mobilize funding from private actors and the private sector. Much of the focus has been on ensuring that specific investments comply with human rights and development standards. That remains important.
But financial integrity is also about longer-term systems de-risking. Investments in anti-corruption mechanisms, laws that reduce corruption risk and dispute-resolution frameworks can make markets more attractive for private investment. The goal is to build systems where private actors face lower real or perceived risk and can operate without relying as heavily on facilitated investment support.
In that sense, we need to distinguish between short-term and long-term de-risking, and between project-level and systems-level de-risking.
Michael Jarvis: There is a strong private sector incentive to support financial integrity, especially for companies operating across borders. But there is also a quid pro quo: corporate actors need to uphold their own standards of financial integrity. That includes thinking responsibly about the taxes they pay in different jurisdictions and avoiding excessive profit shifting.
The private sector benefits from stronger financial integrity systems, but it also has responsibilities within them. Beneficial ownership transparency is one example where progress has helped make it easier to identify who is behind corporate structures. These structures are still misused, but many legitimate private sector actors increasingly recognize that transparency can help distinguish them from bad actors and reduce reputational risk.
All of us have a role in the system. The challenge now is to make a clear case for why financial integrity deserves continued investment, government attention and policy bandwidth, especially at a time of aid cuts, foreign assistance pressures and tight country budgets. That is a collective challenge, and one we need to keep elevating.
IPS UN Bureau
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