Financial Integrity & Stability

The ‘dirty money’ generated from criminal activities, corruption and tax evasion undermines development by siphoning off billions of funding that could be used for investments in health, education, infrastructure, and other priorities. Illicit money imposes a significant cost on national security, economic opportunity, and the rule of law in emerging markets and developing economies (EMDEs). The World Bank Group helps countries build capacity to intercept these flows and keep them out of the global financial system. As criminals gain new abilities to move funds across borders without detection, we are working to bolster the capacity of institutions to uncover, prosecute, and prevent such movements in the future, as well as to restitute official funds stolen in corruption back to public coffers.

Financial stability is the foundation for economic growth and jobs. Healthy and resilient financial institutions channel funding into credit equity investments required to fuel business activity and job creation. When financial institutions are weak, they are unable to create credit, which prolongs economic downturns and intensifies their toll of lost jobs and rising poverty. The World Bank Group helps client countries prevent and mitigate financial crises by monitoring financial systems to identify vulnerabilities and develop appropriate policy responses; and by strengthening bank supervision.

The World Bank Group works with governments to build capacity in anti-corruption and auditing, as well as assistance on policies relating to public financial management, tax evasion, public procurement, trade facilitation and border crossing, natural resource management, and economic regulation.

We develop tools to monitor and measure illicit financial flows at the country and regional level and are continuing our work to help countries identify and respond to risks relating to money laundering. Our national risk assessment tool focuses on all offenses that generate illegal proceeds, including corruption, tax evasion, organized crime, and environmental crime and helps countries understand the extent of their exposure to many of the activities that give rise to illicit financial flows.

We are working to improve access to information on beneficial owners for public authorities and strengthen the exchange of tax information. We are also helping governments build systems for asset disclosure by public officials and to protect against money laundering. These efforts to build transparency and accountability also aim to ensure that clean public officials and businesses are recognized, while corrupt and criminal ones are sanctioned.

The World Bank Group’s experience as a technical assistance provider and assessor, as well as its work on development challenges related to issues around AML/CFT, make it a strong voice for EMDEs in global forums, including the Financial Action Task Force (FATF), the Financial Stability Board (FSB), the G20, and others. The unit contributes to global discussions on a wide range of issues, including anti-corruption efforts, financial inclusion, stolen asset recovery, asset disclosure and environmental crime.

The Stolen Asset Recovery Initiative (StAR), a partnership between the World Bank Group and the United Nations Office on Drugs and Crime (UNODC), supports international efforts to end safe havens for corrupt funds, working with developing countries and financial centers to prevent the laundering of the proceeds of corruption, and to facilitate more systematic and timely return of stolen assets for public use.

Our  Financial Sector Assessment Program (FSAP), a joint effort with the International Monetary Fund (IMF), provides a comprehensive, in-depth look at financial conditions in individual countries. Advice focuses on aligning regulatory and supervisory frameworks with international best practices and standards. Our work is integrated with global standard-setting bodies, where one of our core goals is to present the perspectives and experiences of emerging market and developing economies (EMDEs), which tend to be under-represented in international fora. The unit coordinates the WB engagement with the Financial Stability Board (FSB).

Advisory programs often follow or build on the results of a country’s FSAP. For example, assessments of compliance with the Basel Core Principles for Effective Banking Supervision (BCP) have led to programs that are aimed at aligning regulatory and supervisory frameworks with global standards. Advisory programs can be designed to improve specific regulations, improve risk management systems in banks, and adopt risk-based supervision, among others.

• Basel Committee on Banking Supervision (BIS)
• Financial Action Task Force (FATF)
• Financial Sector Assessment Program (FSAP)
• Financial Stability Board (FSB)
• International Association of Deposit Insurers (IADI)
• International Monetary Fund (IMF)
• International Organization of Securities Commissions (IOSCO)
• Stolen Asset Recovery Initiative (StAR)