The Voice of OECD Business

Guidelines and Recommendations Addressed to States

• OECD Recommendation on Tax Deductibility of Bribes

• OECD Guidelines for Managing Conflict of Interest in the Public Service

• OECD Action Statement on Bribery and Officially Supported Export Credits

• Principles for Donor Action in Anti-Corruption

• Paris Declaration on Aid Effectiveness

• Basel Committee Guidelines on Customer Due Diligence for Banks

• Financial Action Task Force

OECD Recommendation on Tax Deductibility of Bribes

The 1996 Recommendation of the OECD Council on the Tax Deductibility of Bribes to Foreign Public Officials sought to put an end to claiming bribes to foreign public officials as tax deductible expenses. Based on this recommendation the vast majority of Parties to the OECD Anti-Bribery Convention now prohibits the deductibility of bribes to foreign public officials. In many cases, countries have gone one step further and have prohibited the deductibility of all bribes.

[Top]

The Guidelines set a comprehensive benchmark for modernising governance structures to identify and manage conflict of interest situations. To help governments apply the Guidelines, a practical Toolkit has been developed to put policy into practice. Since the adoption of the 2003 Recommendation, 23 of the OECD’s 30 member countries have enhanced the standards in their laws and codes of conduct and strengthened implementation measures to prevent conflict of interest. The OECD has recently reviewed arrangements for promoting integrity in lobbying and post-public employment.

[Top]

Under the OECD Anti-Bribery Convention, governments are obliged to take action to deter and sanction bribery of foreign public officials in international business transactions supported by official export credits. This general requirement has been reinforced by a set of specific common undertakings agreed by the OECD in its 2000 Action Statement on Bribery and Officially Supported Export Credits which was revised in 2006. The 2006 Action Statement contains a number of specific recommendations that countries are asked to take into account regarding the provision of officially supported export credits. In particular the Action Statement calls for enhanced scrutiny of transactions where there are apparent risks of bribery – for example, where companies appear on multilateral financial institutions’ debarment lists or if there have been past convictions for violations of anti-foreign bribery laws. Countries monitor the implementation of the Action Statement through an ongoing review process. These recommendations are of immediate relevance to businesses that seek export credit support in countries that are participants to the OECD Export Credit Arrangement.

[Top]

The Principles were developed by OECD countries in their capacity as donors. In these principles donors resolve to harmonise their efforts to support developing countries’ anti-corruption work and to address the supply side of corruption. Goals set out in the principles include strengthening civil society in aid recipient countries and their capacity to demand reform and transparency in the fight against corruption, and progress in donor countries on issues such as money laundering and recuperating assets lost through corruption. Donors are also working to assess corruption jointly in aid recipient countries and to formulate a code of conduct for donor agencies to prevent, detect, and respond to corruption.

[Top]

The Declaration goes beyond previous agreements among donors and defines a clear, practical plan to help improve the quality and positive impact of development aid. Within this framework donors have committed to giving greater support to developing countries’ anti-corruption efforts, aligning with country-led initiatives and promoting local ownership of anti-corruption reforms. Specific areas of focus are developing countries’ programs to strengthen procurement systems and financial management systems.

[Top]

The 13 member Basel Committee, established by the Bank for International Settlements (BIS), formulates broad supervisory standards and guidelines and recommends best practices in the expectation that individual authorities will implement them through detailed and tailor made arrangements. The aim is a move towards common approaches and common standards without attempting detailed harmonisation of member countries' supervisory techniques. One of its initiatives of the Basel Committee is to benchmark know-your-customer (KYC) policies for banks, most closely associated with the fight against money-laundering. Sound KYC policies and procedures are critical in protecting the safety and soundness of banks and the integrity of banking systems, thereby reducing risks. KYC safeguards require banks to formulate a customer acceptance policy and a tiered customer identification programme that involves more extensive due diligence for higher risk accounts, and includes proactive account monitoring for suspicious activities. The Paper on Customer Due Diligence for Banks provides precise guidance on the essential elements of KYC standards and their implementation. These standards may need to be supplemented and/or strengthened, by additional measures tailored to the risks of particular institutions and risks in the banking system of individual countries. The need for rigorous customer due diligence standards is not restricted to banks and need to be developed for all non-bank financial institutions and professional intermediaries of financial services such as lawyers and accountants.
[See also, The Joint Forum Initiatives with  International Organization of Securities Commissions, International Association of Insurance Supervisors to combat money laundering and the financing of terrorism: http://www.bis.org/publ/joint05.pdf and Prevention of criminal use of the banking system for the purpose of money-laundering: http://www.bis.org/publ/bcbsc137.pdf]

[Top]

The FATF is an inter-governmental body whose purpose is the development and promotion of national and international policies to combat money laundering and terrorist financing. The FATF has published recommendations addressed to countries in order to meet the objective with respect to money laundering. These cover the criminal justice system and law enforcement, the financial system and its regulation, and international co-operation. They FATF Recommendations have been recognised, endorsed, or adopted by many international bodies. Though not a binding international convention, many countries have made a political commitment to implement the FATF Recommendations.

[Top]