A/HRC/22/42 heavy external debt burdens, developing countries tend to be the most severely affected by financial outflows related to such schemes. 9. It is notable that most illicit financial flows are facilitated by tax havens, secrecy jurisdiction, shell companies that cannot be traced back to their owners, anonymous trust accounts, bogus charitable foundations, money-laundering techniques and questionable trade practices. 10. While in the past persons hid their involvement with funds derived from bribery, embezzlement of public funds, tax evasion or other forms of corruption through anonymous bank accounts or accounts in fictitious names, this option is becoming increasingly less available. The preferred method is the use of a corporate vehicle. This term is used to refer to companies or corporations, foundations and trusts. A study by the Stolen Asset Recovery (StAR) Initiative, a joint initiative of the World Bank and the United Nations Office on Drugs and Crime (UNODC), showed that trust and company service providers, including those in OECD countries, often fail to exercise sufficient due diligence when approached to create or provide administrative services for such corporate vehicles to comply with the recommendations by the Financial Action Task Force (FATF). 6 11. There is also evidence that, by failing to exercise due diligence, banks play a key role in facilitating illicit financial flows. A series of high profile court cases in the United States of America and elsewhere have shown that international banks have frequently been negligent or complicit in the laundering of corruption proceeds or tax evasion. 7 On 11 December 2012, for example, the bank HSBC entered into a deferred prosecution agreement in terms of which it agreed to pay penalties of a little more than US$1.9 billion for systemic and willful violations of United States anti-money-laundering and foreign sanctions laws.8 In the United Kingdom, a 2011 report by the Financial Services Authority based on a survey of the screening practices of British banks for politically exposed persons found that three quarters of the banks surveyed did not properly establish the legitimacy of the funds deposited by such persons; over half failed to apply enhanced due diligence to high-risk politically exposed persons; and over a third “appeared willing to accept very high levels of money-laundering risk” from such clients.9 Global Witness, a non-governmental organization that campaigns against natural resource-related corruption and conflict, has 6 7 8 9 6 Emile van der Does de Willebois and others, The Puppet Masters: How the Corrupt Use Legal Structures to Hide Stolen Assets and What to Do About It (Washington, D.C., International Bank for Reconstruction and Development/The World Bank, 2011). See, e.g., United States, Senate, Permanent Subcommittee on Investigations of the Committee on Homeland Security and Governmental Affairs, Money Laundering and Foreign Corruption: Enforcement and Effectiveness of the Patriot Act: Case Study Involving Riggs Bank (Washington, D.C., 2004) and Keeping Foreign Corruption Out of the United States: Four Case Histories (Washington, D.C., 2010). Ben Protess and Jessica Silver-Greenberg, “HSBC to Pay $1.92 Billion to Settle Charges of Money Laundering”, New York Times, 10 December 2012; and United States, Department of Justice, Office of Public Affairs, “HSBC Holdings plc and HSBC Bank USA N.A. Admit to Anti-Money Laundering and Sanctions Violations”, 11 December 2012. Available from www.fbi.gov/washingtondc/pressreleases/2012/hsbc-holdings-plc-and-hsbc-bank-usa-n.a.-admit-to-anti-money-laundering-andsanctions-violations-forfeit-1.256-billion-in-deferred-prosecution-agreement. Financial Services Authority, Banks’ management of high money-laundering risk situations (London, 2011), p. 4.