Originally published by Thomson Reuters on Regulatory Intelligence 29-Nov-2024, written by
Denisse Rudich

This year’s G20 Summit was no stranger to controversy, with Brazil’s first lady yelling expletives at Elon Musk on the eve of the event, Russia’s presence leading to the stark absence of some leaders in key group photos and the Argentinian president impeding consensus.
Brazil’s G20 Summit, held in Rio de Janeiro from November 18 to 19, addressed several matters relevant to compliance officers, including predicate offences for money laundering. Additionally, geopolitical references potentially signalled new sanctioning efforts.
Conflicts in Ukraine, the Middle East and Africa loomed over the summit.
Leaders reaffirmed their commitment to promoting an “open, resilient, inclusive and stable financial system” and to lead by example in international efforts against corruption and illicit financial flows. More broadly, the summit’s theme was “building a just world and sustainable planet,” with inequality forming the notional centre of the group’s agenda.

Corruption, financing for development and predicate offences for financial crime
The G20 cited the impact of corruption on poverty, inequality and sustainable development, recognising that “anti-corruption and integrity promotion can contribute to building a just world and a sustainable planet.” G20 leaders stressed that they would use the U.N.’s GlobE Network and other international anti-corruption networks.
Sustainable growth and development, green finance transition and tackling poverty and hunger were all discussed. G20 leaders committed to accelerating progress and financing for development to meet the U.N.’s 2030 Sustainable Development Goals (SDGs),
which is estimated to cost between $5 to $7 trillion per year. This will include promoting the flow of concessional resources (i.e., those
with lower interest rates) for low- and middle-income countries, with the G20 noting the “importance of transparency and mutual accountability.”
Funding for development is at high risk of loss due to corruption, with development aid facing a “leakage rate” of 7.5%. Financial institutions involved in this field or those with contractors or businesses who receive funding to limit bleed must, therefore, implement strong anti-corruption frameworks.
Tailored transaction monitoring controls should also be put in place to ensure that disbursements, fund drawdowns and payments align with contracts and anticipated business, taking care to query any payments to related parties, including firms owned and controlled by family members of politically exposed persons (PEPs).
Enhanced due diligence on customers who are PEPs or beneficially owned or controlled by PEPs from countries with high levels of corruption that are recipients of development financing is also an essential mitigating action.
Leaders issued commitments regarding predicate offences for money laundering. They also committed to eradicating forced labour, modern slavery, human trafficking, all forms of child labour and gender-based violence, including sexual violence against women and girls. The G20 said it recognised the importance of preventing irregular migrant flows and migrant smuggling. Such crimes underpin or
are exacerbated by the $150 billion per year human trafficking industry.
Regarding environmental crime, leaders expressed support for critical minerals and materials beneficiated at source to support the just energy transition. Critical minerals are at risk of and can contribute to corruption, organised crime, local conflict, human rights abuses and modern slavery.
The G20 further stressed the importance of raising efforts to combat deforestation and forest degradation by 2030 and land degradation by 50% by 2040. It is estimated that 10 million hectares of forest are cut down each year, and between 50% and 90% of deforestation in the Amazon, Central Africa and Southeast Asia can be attributed to illegal logging. The illegal logging industry is valued between $51
billion and $152 billion per year.
G20 leaders also committed to reducing significantly the generation of waste and ending plastic pollution. Pollution crimes, which include plastic waste trafficking, greenwashing and fraudulent reporting, are more prevalent in countries with weak environmental legislation and law enforcement capacity and are seen as fuelling organised crime.-1
The G20 further pledged to protect the marine environment and the conservation and sustainable use of marine resources and biodiversity. This requires a focus on illegal, unregulated and unreported (IUU) fishing, which leads to losses of between £10 billion and £20 billion annually. Firms should understand their exposure to this category of crime and should build it into their anti-money laundering (AML) frameworks as part of enterprise-wide risk assessment and AML policies.

Continuing conflicts and sanctions

Although all members must comply with U.N. Security Council sanctions, there are countries with unilateral sanction regimes that will continue adding new sanctions against actors they accuse of perpetrating or benefiting from conflict, including natural and legal persons that facilitate sanctions evasion.
Countries will also likely issue additional licences to allow humanitarian assistance flows into conflict zones. There is also a strong possibility that the U.N. and other countries may issue additional sanctions to limit the threat of terrorism and nuclear weapons, as Russia has updated its nuclear weapons.
G20 leaders cited “the immense human suffering and the adverse impact of wars and conflicts around the world,” reiterating their stated national positions and publicly urging countries to hold back from using force when seeking to acquire territory. The group said it condemned “all attacks against civilians and infrastructure,” which was likely a nod toward Russia’s bombing of Ukrainian energy
infrastructure.
The G20 expressed concern about “the catastrophic humanitarian situation in the Gaza Strip and the escalation in Lebanon” and affirmed Palestinians’ right to self-determination. It also re-stated its commitment to the two-state solution for Israel and Palestine, expressing unity in support for a comprehensive ceasefire in Gaza and Lebanon to allow the return of displaced citizens. The leaders
further emphasised the need to reinforce the protection of civilians and allow the creation of humanitarian corridors.
Ministers shared that side-meeting discussions addressed Sudan, although the Leaders’ Declaration did not mention Sudan. Leaders highlighted the negative impacts of the Ukraine war on human suffering and international food and energy security, supply chains, macro-financial stability, inflation and growth. G20 leaders recommitted to a “world free of nuclear weapons” and condemned terrorism
“in all its forms and manifestations.”
Firms must ensure they continuously test their sanctions controls, including periodic customer screening and payment filtering. They should also review the UK Financial Conduct Authority’s recent £29 million fine against Starling Bank, which details what to avoid when implementing sanctions controls.
As conflicts are breeding grounds for criminality, firms should also ensure that at-war countries are listed as higher risk in internal AML/CFT policies, triggering a review of payments made to these regions to ensure that they align with risk appetite.

Related initiatives
A key initiative discussed at the summit would impose a tax on ultra-high-net-worth individuals. It is estimated that a 2% tax on the ultra rich could generate $250 billion that could be re-invested. Leaders also indicated a shift from focusing on tax evasion to tax avoidance, with leaders calling for the cooperative development of “anti-avoidance mechanisms, including addressing potentially harmful tax
practices.”
Accordingly, firms should monitor developments in this field as part of their horizon planning and identify how their tax evasion frameworks may need to be aligned to emerging initiatives.
As part of discussions on inequality, the G20 recognised “the significant role of financial inclusion in improving financial wellbeing and achieving the SDGs.” Financial inclusion is a priority for the global AML/CFT standard-setter the Financial Action Task Force (FATF) under the G20 Presidency held by Mexico for the next two years. The FATF has an open consultation (ending December 6) on proposed changes to the FATF Standards on AML/CFT and Financial Inclusion.
The G20 also called for the support of open and inclusive dialogue on the restitution of cultural property, including illegally exported items, with antiquities trafficking remaining a threat to this initiative. Firms should identify whether they have related exposure and implement appropriate controls, including training for employees exposed to such business.
G20 leaders further flagged how emerging technology such as artificial intelligence (AI) has played a major role in disinformation, misinformation, hate speech and other online harm, stressing the need to leverage AI in a responsible and human-centric manner that protects rights and safety.
They highlighted the need to ensure “safe, secure, and trustworthy AI development, deployment and use, the protection of human rights, transparency and explainability, fairness, accountability, regulation, safety, appropriate human oversight, ethics, biases, privacy, data protection and data governance must be addressed.”
Firms should adhere to international, regional and domestic AI governance guidelines and laws when looking to adopt AI or build AI models into their financial crime prevention frameworks.

Denisse Rudich is director of the G7 and G20 Research Groups (London). She is also founder and CEO of Rudich Advisory and Derumari Ltd, and a global champion of financial crime prevention initiatives, which includes identifying and preventing sanctions evasion in the international financial system.