Business
Up to $41 billion in World Bank climate finance unaccounted for, Oxfam finds
News release from Oxfam International
Up to $41 billion in World Bank climate finance —nearly 40 percent of all climate funds disbursed by the Bank over the past seven years— is unaccounted for due to poor record-keeping practices, reveals a new Oxfam report.
An Oxfam audit of the World Bank’s 2017-2023 climate finance portfolio found that between $24 billion and $41 billion in climate finance went unaccounted for between the time projects were approved and when they closed.
There is no clear public record showing where this money went or how it was used, which makes any assessment of its impacts impossible. It also remains unclear whether these funds were even spent on climate-related initiatives intended to help low- and middle-income countries protect people from the impacts of the climate crisis and invest in clean energy.
“The Bank is quick to brag about its climate finance billions —but these numbers are based on what it plans to spend, not on what it actually spends once a project gets rolling,” said Kate Donald, Head of Oxfam International’s Washington D.C. Office. “This is like asking your doctor to assess your diet only by looking at your grocery list, without ever checking what actually ends up in your fridge.”
The Bank is the largest multilateral provider of climate finance, accounting for 52 percent of the total flow from all multilateral development banks combined.
The issue of climate finance will take center stage at this year’s COP in Azerbaijan, where countries are set to negotiate a new global climate finance goal, the New Collective Quantified Goal (NCQG). Climate activists are demanding the Global North provide at least $5 trillion a year in public finance to the Global South “as a down payment towards their climate debt” to the countries, people and communities of the Global South who are the least responsible for climate breakdown but are the most affected. Oxfam warns that the lack of traceable spending could undermine trust in global climate finance efforts at this critical juncture.
“Climate finance is scarce, and yes, we know it’s hard to deliver. But not tracking how or where the money actually gets spent? That’s not just some bureaucratic oversight —it’s a fundamental breach of trust that risks derailing the progress we need to make at COP this year. The Bank needs to act like our future depends on tackling the climate crisis, because it does,” said Donald.
Oxfam’s investigation revealed that obtaining even basic information on how the World Bank is using climate finance was painstaking and difficult.
“We had to sift through layers of complex and incomplete reports, and even then, the data was full of gaps and inconsistencies. The fact that this information is so hard to access and understand is alarming —it shouldn’t take a team of professional researchers to figure out how billions of dollars meant for climate action are being spent. This should be transparent and accessible to everyone, most importantly communities who are meant to benefit from climate finance,” said Donald.
Notes to editors
Download Oxfam’s new report “Climate Finance Unchecked.”
Business
Canada can – and should – crack down on trade-based money laundering
From the Macdonald Laurier Institute
By Jamie Ferrill for Inside Policy
Neglecting to take decisive action enables organized criminal networks whose activities cause significant harm on our streets and those of our international partners.
Financial crime bears considerable political and economic risk. For the incoming Trump administration, the threat that transnational organized crime and the illicit financial flows pose to global financial stability is a top priority. The threat of tariffs by the Trump administration makes the costs to Canada in enabling global financial crime all too apparent. In addition to the cost of tariffs themselves, the associated reputational risk and loss of confidence in Canada’s financial system has implications for investments, credit, supply chains, and bilateral co-operation and agreements.
Canada’s proximity to major international markets, stable economy, high standard of living, and strong institutions and frameworks make it an attractive place to do business: for both legitimate and criminal enterprises.
Trade is a key contributing sector for Canada’s economic security. It represents two-thirds of Canada’s GDP, and exports alone support nearly 3.3 million Canadian jobs. Trade is also highly vulnerable to criminal exploitation. Ineffective oversight, regulatory complexity, and lagging technology adoption, coupled with a lack of export controls, make it possible to move vast proceeds of crimes, such as those from drug trafficking, human trafficking, corruption, and tax evasion through the global trade system.
These vulnerabilities are well-known by transnational organized crime groups. They are able to effectively move billions of dollars of dirty money through the global trade system every year, a method commonly referred to as Trade-Based Money Laundering (TBML).
While any statistics must be interpreted with caution, evidence shows that TBML is a prevalent method of money laundering.
What is it?
There are several types of Trade-Based Financial Crimes such as terrorism financing through trade, sanctions evasion, and simply trade fraud. However, the TBML definition is necessarily specific. Essentially here, TBML is a money laundering method: the processing of criminal proceeds to disguise their illegal origin. TBML involves the movement of value through the global trade system to obfuscate the illicit origin. This is usually done through document fraud: undervaluing, overvaluing, phantom shipping, or multiple invoicing. Different techniques employ different aspects of the supply chain. And TBML may be just one method used within larger money laundering operations.
By way of example, US authorities allege that two Chinese nationals living in Chicago laundered tens of millions of dollars for the Sinaloa and Jalisco Cartels. Drugs were smuggled into the United States and sold throughout the country. The proceeds from these sales were collected by the Chinese nationals. Those proceeds were used to purchase bulk electronics in the United States, which were then shipped – with a falsified value – to co-conspirators in China, who sold them locally. The legitimacy provided by the electronics sales and the trade transaction provide cover to “clean” proceeds from precursor crime.
Either the importer and/or the exporter of the goods can shift value. Chances here are the electronics shipped were undervalued: on leaving the country, they are declared at a (much) lower value than they are actually worth. The importer in China pays the undervalued invoice, then sells the goods for what they are worth. The profit from those electronics now appears clean, since it was used for a “legitimate” sale. The ensuing value gap can be transferred informally or stored as illicit wealth. The value has now shifted, without fiat currency leaving the country of origin.
But the cycle does not stop there. The value and money itself continue to traverse around the world, through various intermediaries such as financial institutions or cryptocurrency exchanges. It then goes right back into the system and enables the very crimes and organized crime groups that generated it in the first place. It is, in short, the business model of organized crime.
The Canadian problem
Ultimately, the proceeds of crime that have been legitimised through TBML (and other money laundering methods) supports the criminal enterprises that generated the value in the first place. In the example, these are prolific cartels who have been behind the fentanyl crisis, migrant trafficking and abuse, corruption, and widespread violence that destabilizes communities and undermines governments across North America and beyond.
With new actors, drug routes, and ways of doing business, the cartels are very much active in Canada. The Sinaloa cartel in particular has established a significant presence in Canada where it controls the cocaine market, manufactures and distributes fentanyl, and is embedded in local criminal networks. This increases Canada’s role as a strategic location for drug trafficking and a base to export abroad, notably to Europe, the US, and Australia.
Hells Angels, Red Scorpions, ’Ndrangheta, and other organized crime groups are also exploiting Canada’s strategic location using their transnational links. These groups are active in criminal activities that generate proceeds of crime, which they launder through Canadian institutions. From drug trafficking to extortion to human and sex trafficking, the foundation of organized crime relies on generating and maximizing profits. The proceeds generally need to be laundered; otherwise, there are direct lines back to the criminal organizations. They are, without a doubt, exploiting the trade sector; the very sector that provides so much economic security for Canada.
Canada’s regulation, reporting, and prosecution record for money laundering is notoriously weak. Its record for regulation, reporting, and prosecution for trade-based financial crimes, namely here TBML, is even weaker.
As financial institutions and other regulated entities face increased scrutiny following the TD Bank scandal and the Cullen Commission’s inquiry into money laundering in BC, more criminal activity is likely to be displaced into the trade sector and the institutions it comprises.
TBML is difficult for financial institutions to detect, especially given that 80 per cent of trade is done through open accounts. It exploits established trade structures that are meant to protect the system –like documentation and invoicing processes – by manipulating transactions outside traditional payment systems, which requires more sophisticated anti-money laundering strategies to address these hidden vulnerabilities.
Addressing the problem
Trade is a gaping vulnerability. Yet, it attracts minimal attention in countering transnational financial crime. Containing the fentanyl crisis for one requires a collaborative effort to bolster supply chains and the trade sector against financial crime. This means global cooperation, technological advances (such as blockchain technology), appropriate resourcing, more scrutiny on high-risk countries and shippers, and regulatory innovation.
But political will is in short supply. The federal government’s Budget 2024 and the resulting proposed Regulations Amending Certain Regulations Made Under the Proceeds of Crime (Money Laundering) and Terrorism Financing Act will grant CBSA new authorities to counter TBML, but limited resources to make good on them. And CBSA cannot do it alone.
Transnational organized crime and the illicit financial flows that support it poses a threat to global financial stability. The enabling of financial crime hurts Canada’s reputation abroad. With a new political regime emerging in the US, Canada cannot afford to be seen as a weak link. Loss of confidence in a country and its financial system has implications for investments, credit, supply chains, and bilateral cooperation and agreements.
By neglecting to take decisive action, we inadvertently enable organized criminal networks whose activities cause significant harm on our streets and those of our international partners. With profits as their primary driver, it is imperative that we scrutinize financial pathways to disrupt these illicit operations effectively.
Organized crime groups are not bound by privacy laws, bureaucracy, political agendas, and government budgets. They are continually evolving and staying many steps ahead of what Canada is equipped to control: technologically, geographically, strategically, logistically, and tactically. Without appropriate regulations, technological advances, and resources in place, we will continue to be a laggard in countering financial crime.
More systematic change is needed across regulatory frameworks, law enforcement coordination and resourcing, and international partnerships to strengthen oversight, close loopholes, and enhance detection and disruption. It would be a low-cost signal to the Trump administration that Canada is committed to upping its game.
Jamie Ferrill is senior lecturer in Financial Crime at Charles Sturt University and co-editor of Dirty Money: Financial Crime in Canada.
Business
TikTok on the Clock: US Appeals Court Hits the “Ban” Button
The winds of Washington are blowing icy cold for TikTok this December. A federal appeals court panel handed down a ruling today that could send the app packing— or at least force it into a kind of corporate divorce.
The US Court of Appeals for the District of Columbia Circuit has today declared the law threatening TikTok’s existence to be totally constitutional, leaving the platform to fight for its digital life. In short, TikTok has until mid-January to break ties with its Beijing-based parent, ByteDance, or risk an outright ban in the United States. TikTok responded with the following statement: “The Supreme Court has an established historical record of protecting Americans’ right to free speech, and we expect they will do just that on this important constitutional issue. Unfortunately, the TikTok ban was conceived and pushed through based upon inaccurate, flawed and hypothetical information, resulting in outright censorship of the American people. The TikTok ban, unless stopped, will silence the voices of over 170 million Americans here in the US and around the world on January 19th, 2025.” The Free Speech Shuffle TikTok played the First Amendment card, arguing that banning the platform would stomp on Americans’ free speech rights. But the court wasn’t having it, throwing in a little verbal aikido about protecting actual freedom. “The First Amendment exists to protect free speech in the United States,” the court wrote, presumably while straightening its tie in a metaphorical mirror. “Here the Government acted solely to protect that freedom from a foreign adversary nation and to limit that adversary’s ability to gather data on people in the United States.” Translation: TikTok, it’s not you — it’s China. |
TikTok has been accused of being influenced by the Chinese Communist Party.
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ByteDance’s Legal Tango
TikTok and its parent company, ByteDance, is already planning to appeal to the Supreme Court because apparently, they’re gluttons for punishment. And hey, why not? When you’re staring down a deadline that could nuke your entire US business, you either fight or fold. But here’s where it gets interesting: the same President-elect Donald Trump who once tried to fire TikTok like it was a contestant on The Apprentice now says he’s against a ban. Trump has promised to swoop in and “save” the platform during his second term. The law itself was signed by President Joe Biden in April, marking a rare bipartisan moment in a town otherwise allergic to cooperation. For years, Washington has been gnashing its teeth over TikTok’s ties to the Chinese government, accusing the app of being a national security threat disguised as a dance challenge factory. Of course, critics argue this is about power. TikTok’s cultural dominance has made it an unpredictable disruptor, threatening not only Big Tech’s grip on social media but also giving the average American teen more clout than your local senator. Government officials argue that the app’s voracious appetite for user data could lead to sensitive information, from browsing histories to biometric identifiers, being vacuumed up by the Chinese communist government. But the main issue? The proprietary algorithm, that magical machine-learning potion that keeps you scrolling at 2 a.m., is painted as a weapon of influence — a subtle but powerful propaganda tool ready to tweak your feed for Beijing’s benefit. Except, there’s a catch: a good chunk of the government’s evidence for these claims is locked behind classified curtains. TikTok’s attorneys — and by extension the American public — are left in the dark. |
More than 170 million Americans use TikTok.
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TikTok Fights Back
TikTok has steadfastly denied being a Chinese Trojan horse, insisting that no evidence exists to prove they’ve ever handed over data to Beijing. As for the algorithm? TikTok says any suggestion of manipulation is pure speculation. Their legal team hammered home that the government’s arguments rely on what might happen in the future — a slippery foundation for ripping apart a platform that’s glued to the cultural zeitgeist. But the Department of Justice isn’t just playing futurist. It has hinted — vaguely and ominously — at unspecified past actions by TikTok and ByteDance in response to Chinese government demands. The key word here is “unspecified,” because whatever receipts the DOJ might have, they’re conveniently out of reach for TikTok’s lawyers, the media, or anyone else. A Courtroom Tango: First Amendment vs. National Security The appeals court panel, a politically mixed trio of judges, seemed as torn as the rest of us about how far Uncle Sam can stretch its First Amendment arguments to justify banning an app with foreign ties. Over two hours of oral arguments in September, the judges volleyed tough questions at both sides. Can the government really shut down a platform just because it’s foreign-owned? the judges asked, channeling TikTok’s core argument. On the flip side: What happens if this platform turns into a covert disinformation campaign during wartime? they wondered, invoking wartime-era laws restricting foreign ownership of broadcast licenses. Both sides twisted themselves into legal yoga poses. TikTok’s lawyer, Andrew Pincus, argued that a private company — even one with foreign owners — deserves constitutional protections. The DOJ’s Daniel Tenny countered that the government has a duty to head off potential foreign interference, even if the threat isn’t fully realized yet. $2 Billion in Data Defenses TikTok itself hasn’t just been sitting back while lawyers spar. The company claims it’s invested over $2 billion to fortify its US data, including setting up Project Texas — a heavily marketed initiative to store American user data on servers managed by Oracle. ByteDance has also floated the idea of a comprehensive draft agreement that it says could have eased Washington’s fears years ago. But according to TikTok, the Biden administration ghosted them, walking away from the negotiating table without offering a viable path forward. The DOJ insists the draft didn’t go far enough, but skeptics wonder if the government’s hardline stance is less about national security and more about flexing control over Big Tech. Divestment Drama Washington’s solution to the TikTok dilemma sounds deceptively simple: ByteDance should sell the US arm of TikTok. However attorneys for the company argue that such a divestment would be a logistical and commercial nightmare. And without TikTok’s algorithm—intellectual property that Beijing is unlikely to let go of—the app would lose its magic. Imagine TikTok without its eerily intuitive feed: it’d be MySpace 2.0, a ghost town for millennials waxing nostalgic. Still, some sharks smell blood in the water. Billionaire Frank McCourt and former Treasury Secretary Steven Mnuchin have rallied a consortium with over $20 billion in informal commitments to snap up TikTok’s US operations. TikTok isn’t going down without a fight and it’s bringing allies to the battlefield. The company’s legal challenge has been bundled with lawsuits from several content creators, who argue that losing the platform would gut their livelihoods, and conservative influencers who claim a ban would silence their political speech. TikTok, ever the sugar daddy, is footing the legal bills for its creators — a savvy PR move if ever there was one. The Clock is Ticking If TikTok’s Hail Mary appeal to the Supreme Court fails, it’ll be up to President Trump’s Justice Department to enforce the ban. That means app stores would have to scrub TikTok from their offerings, and hosting services would be barred from supporting it. And what happens to the millions of creators, small businesses, and teenagers who’ve turned TikTok into a cultural juggernaut? Well, they’ll probably migrate to Instagram Reels or YouTube Shorts—platforms that coincidentally happen to be owned by US tech giants who’ve been salivating at the thought of TikTok’s demise. This is far from over. |
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