By Lakshmi Kumar
WASHINGTON DC, Jan 3 2023 – Over the last decades, the private investment fund sector has grown into a multi trillion-dollar industry. Private investment funds are vulnerable to money laundering because they contain a variety of structural risk factors that help camouflage illicit behavior.

A 2020 leaked bulletin from the Federal Bureau of Investigation (FBI) found that criminals were using “private placement funds including investments offered by private equity firms and hedge funds, to circumvent the anti-money laundering (AML) programs of other financial institutions and launder money.”

The new Global Financial Integrity (GFI) report Private Investment Funds in Latin America: Money Laundering & Corruption Risks examines the money laundering risk factors associated with these private investment funds in Latin America.

It analyzes the ring of actors and facilitators involved, the methods of contact used by perpetrators and the channels utilized to move illicit money. The report provides a series of case studies and analyzes AML regulation of private investment funds in four countries; Brazil, Mexico, Chile and Argentina.

“Despite the scale of wealth under management, ‘family offices’ have little to no regulatory oversight in most parts of the world,” noted Tom Cardamone, President and CEO at GFI. “This is especially concerning given the close nexus between wealth and corruption in many parts of the world. The unregulated nature of these funds makes them a particularly useful vehicle to mask proceeds of corruption or money laundering.”

Additionally, Private Investment Funds in Latin America uses a series of case studies to highlight how money laundering, corruption and organized crime risks exist in private investment funds in Latin America.

The risk factors include a customer base often composed of wealthy individuals, including politically-exposed persons; a close relationship between fund managers and their clients (i.e. investors); the use of shell companies and trusts to manage investments; outsourcing operations and risk management; weak transparency around source of wealth and source of funds; and investment structures which may include multiple accounts in different jurisdictions, including secrecy and tax havens, with funds moving through a concentration account.

GFI in this report offers the following key recommendations:

• The Brazilian government, which has the largest assets under management in the region, should be the first to adopt AML regulations that will address future risks when they arise. As well as regulators pay closer attention to family office architecture and undertake a risk assessment of the sector
• Latin American authorities should look to regulate intermediaries and enabler professions for AML/CFT due diligence as they are critical in allowing illicit money to move through the financial system within the region but also to be invested in private investment funds overseas.
• The United States, Switzerland, the Cayman Islands, Malta, and other countries within the EU should conduct a robust money laundering risk assessment of their private investment fund sectors.
• Latin American law enforcement authorities involved in corruption, drug trafficking, and organized crime investigations should be provided training on the complexities of private investment funds and the manner in which they can be used to hide illicit assets.

Global Financial Integrity is a Washington, D.C.-based think tank, producing high-caliber analyses of illicit financial flows, advising developing country governments on effective policy solutions and promoting pragmatic transparency measures in the financial system to promote global development and security.

IPS UN Bureau

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Excerpt:

The writer is the Policy Director at Global Financial Integrity (GFI), a Washington, D.C.-based think tank specializing in research, advocacy, and advisory services.

By Francis Kokutse
ACCRA, Jan 3 2023 – As the effects of COVID-19 on Africa’s health sector become clearer, it looks the continent will need to take urgent steps to overcome the disruptions suffered in the breakdown in antenatal and postnatal care for women and newborns and neonatal intensive care units. The pandemic brought some setbacks to the gains achieved in maternal mortality over the past decade.

Consequently, the continent needs to race against time to improve its health sector to meet the Sustainable Development Goals against the backdrop of a new report, the Atlas of Health Statistics 2022, which called for increased investment to avert the growing number in maternal mortality across the continent.

The report said that inadequate investment in health and funding for programmes were some of the major drawbacks to meeting the SDG in the sector.

“For example, a 2022 WHO survey of 47 African countries found that the region has a ratio of 1.55 health workers (physicians, nurses, and midwives) per 1000 people, below the WHO threshold density of 4.45 health workers per 1000 people needed to deliver essential health services and achieve universal health coverage.”

It noted that 65% of births in Africa are attended by skilled health personnel – the lowest globally and far off the 2030 target of 90%, adding that “skilled birth attendants are crucial for the well-being of women and newborns. Neonatal deaths account for half of all under-5 mortality. Accelerating the agenda to meet its reduction goal will be a major step toward reducing the under-5 mortality rate to fewer than 25 deaths per 1000 live births.”

The Ghanaian authorities might have taken note of the trend last year and launched a national campaign to avert all preventable deaths related to pregnancy dubbed “Zero Tolerance for Maternal Deaths.”

Director of the Ghana Health Service (GHS), Dr Patrick Kuma-Aboagye, said the campaign was to remove all barriers and unfair treatments that increased the vulnerability of pregnant women and girls to maternal mortality and also push those with unintended pregnancies to indulge in unsafe abortions and other risky action.

Kuma-Aboagye said the campaign was critical to accelerating the decline of maternal mortality from 308 out of every 1,000 live births to 70 by 2030, in line with the United Nations Sustainable Development Goals (SDGs). “The slow decline in maternal mortality in Ghana is of great concern to the Ministry of Health, the GHS, and its partners.”

Reacting to the Atlas report, WHO Regional Director for Africa, said Dr Matshidiso Moeti, said: “This means that for many African women, childbirth remains a persistent risk and millions of children do not live long enough to celebrate their fifth birthday.”

She asked governments to take note.

“It is crucial that governments make a radical course correction, surmount the challenges, and speed up the pace towards the health goals. These goals aren’t mere milestones, but the very foundations of a healthier life and well-being for millions of people.”

The report estimated that, in sub-Saharan Africa, 390 women will die in childbirth for every 100 000 live births by 2030. This is more than five times above the 2030 SDG target of fewer than 70 maternal deaths per 100 000 live births and much higher than the average of 13 deaths per 100 000 live births witnessed in Europe in 2017.

“It is more than double the global average of 211. To reach the SDG target, Africa will need an 86% reduction from 2017 rates, the last time data was reported, an unrealistic feat at the current rate of decline,” the report said.

The region’s infant mortality rate is 72 per 1000 live births. At the current 3.1% annual rate of decline, there will be an expected 54 deaths per 1000 live births by 2030, far above the reduction target of fewer than 25 per 1000.

The report assessed nine targets related to the Sustainable Development Goal (SDG) on health and found that at the current pace, increased investment is needed to accelerate progress on the targets. Among the most difficult to achieve will be reducing maternal mortality.

Physician and chief executive officer of Medway Health, Dr Omotuyi Mebawondu, has expressed concern that despite the worldwide reduction in maternal mortality rate, sub–Saharan Africa still accounts for two third of an average of 800 daily deaths of women from pregnancy and its complications.

Mebawondu said one of the key interventions is to ensure that pregnant women have access to antenatal care principally to identify danger signals early and enjoy delivery with the assistance of skilled birth attendants.

Accordingly, he has suggested that another way of reducing maternal mortality is to look into the use of technology. “The challenge of human resources for health in sub-Saharan Africa imposes a great responsibility on policymakers to explore technology in delivering health interventions to hard-to-reach populations.

Mebawondu said this must be preceded by adequate internet penetration and access, especially in rural areas, as such technology will help update and upgrade the health workers’ skills and educate the women on the challenges of pregnancy.

“A database of all pregnant women in poor rural localities must be collated and followed up through such technology. In addition, technology can be used to enhance emergency response to common causes of maternal deaths like bleeding, sepsis, and eclampsia. It can also be used to deliver most needed family planning services,” he said.

IPS UN Bureau Report

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