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Analysis

Crypto, Anti-corruption and Anti-money Laundering Initiatives at the G20 Bali Summit

Denisse Rudich, Director, G20 Research Group London
December 8, 2022

The 2022 G20 Bali Summit took place during what is the most contentious period of modern times, with the war in Ukraine, an energy crisis, severe market volatility and a looming global recession. Expectations on what the Indonesian presidency could achieve were low. A Russian-made missile landing in Poland threatened to derail the summit on the first day. In what was hailed as a diplomatic coup, the summit issued a final declaration with all G20 members agreeing on language that referred to the conflict in Ukraine, including the statement "today's era must not be of war." In addition to initiatives to build the global health architecture, facilitate just energy transition and support digital transformation, the G20 G20 Bali Leaders' Declaration includes initiatives on crypto, anti-corruption and financial crime prevention.

Crypto

The crypto market peaked earlier in 2022, with the value of the market of this new asset class reaching $3 trillion in value. At the Bali Summit, G20 leaders welcomed the Crypto-Asset Reporting Framework. This is a tax transparency framework developed by the Organisation for Economic Co-operation and Development (OECD) to facilitate the automatic exchange of information on transactions involving crypto assets. The G20 further welcomed the work of the Financial Stability Forum and other international bodies to monitor crypto assets and stablecoin, which are crypto assets pegged to a currency or commodity to manage financial stability risks. This monitoring includes:

• "robust regulation, supervision, and oversight";
• a comprehensive global framework to regulate crypto;
• promoting "same activity, same risk, same regulation" principles;
• review of "global stablecoin" arrangements; and
• consultation on proposals for international consistent regulation and supervisory approaches to crypto assets and markets.

The G20 further stated that it is essential that there is "public awareness of risks," that regulatory outcomes are stronger and that a level playing field is created while allowing for the benefits of innovation to be harnessed. This statement was likely in response to the collapse of the FTX crypto exchange the week before the summit, shedding light once again on the need for better regulation of crypto assets.

Corruption

Corruption was linked to the global recovery effort in the G20 declaration. Leaders committed to lead by example, renewed their pledge for zero tolerance for corruption and recognized the need to mitigate corruption risks "in all sectors." For the first time, the G20 highlighted the role of audits, which can support preventing and identifying corruption, as well as the importance of public participation and anti-corruption education. They further cited accountability and transparency in both the public and private sectors as key to tackling corruption. With regards to calls to action, G20 leaders:

• called on countries to criminalize bribery, including bribery of foreign public officials;
• committed to "effectively prevent, combat, detect, investigate, prosecute and sanction bribery";
• pledged to share information on the criminalization and enforcement of foreign bribery legislation under Article 16 of the United Nations Convention against Corruption;
• will engage with and promote active participation of multiple stakeholders including civil society, academia, media and the private sector "to advance a culture of integrity";
• committed to deny safe haven to "corruption offenders and their assets"; and
• will strengthen international cooperation, laws and regulations to fight economic crimes such as corruption linked to money laundering and organized crime.

This last pledge to strengthen cooperation was a nod to the importance of public-private partnerships, which are essential for information and intelligence sharing and for taking action against financial flows linked to corruption.

G20 leaders further committed to strengthen legal frameworks and international cooperation through mechanisms such as the Global Operational Network of Anti-Corruption Law Enforcement Authorities (GlobE Network) and the G20 Denial of Entry Experts Network. The GlobE Network is an initiative from the 2020 G20 Riyadh Summit, and facilitates communication exchange and capacity building among anti-corruption law enforcement authorities as well as transnational cooperation that complements and coordinates with existing international cooperation platforms. The G20 Denial of Entry Experts Network was established during the 2013 St. Petersburg Summit to prevent corrupt officials from being able to travel abroad. G20 leaders indicated that they looked forward to enlarging the participation in the OECD Anti-Bribery Convention.

Anti-Money Laundering

The G20 leaders dedicated a full paragraph to anti-money laundering. They reaffirmed their commitment to supporting the Financial Action Task Force (FATF) and FATF-style regional bodies in delivering identified strategic priorities and also in leading action on a global scale to address money laundering, terrorist financing and proliferation financing more effectively. They further called on all G20 members to boost collaboration and to adopt and implement FATF standards. Leaders welcomed the FATF's initiatives, citing the following:

• implementation of AML/CFT standards for virtual assets;
• efforts to resolve the "travel rule";
• transparency of beneficial ownership; and
• seizure of criminal proceeds and the repatriation of funds to victims in line with domestic laws.

The G20 further emphasized the FATF's role against environmental crimes and systemic corruption, recognizing that their grave impacts on societies and economies.

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Denisse Rudich is director of the G20 and G7 Research Groups (London) and a financial crime prevention specialist in policy development, strategic advisory and risk management. She has experience in setting up global frameworks in the investment and wholesale banking sectors, advising regulators, government and emerging fintech/regtech firms, and supporting forensic investigations in both the public and private sectors. She is involved in several global initiatives aimed at building effectiveness and collaboration in the fight against financial crime, and is CEO of Rudich Advisory.