Global Cooperation

Partnering Against Corruption: Why real estate and construction are the first to test new anti-corruption initiative

The real estate and construction sectors are building bridges in this anti-corruption initiative.

The real estate and construction sectors are building bridges in this anti-corruption initiative. Image: AtkinsRéalis

Christian Ulbrich
Global Chief Executive Officer; President, JLL
Ian Leslie Edwards
President and Chief Executive Officer, AtkinsRéalis
Christopher Alder
Senior Executive Officer, Standards and Regulation, Royal Institute of Chartered Surveyors (RICS)
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This article is part of: World Economic Forum Annual Meeting
  • Corruption and illicit financial flows are at the root of many challenges that we face globally, from poverty and gender inequality to slow economic growth and climate change.
  • The private sector and professionals working within it can play a proactive role in addressing corruption.
  • The World Economic Forum’s Partnering Against Corruption Initiative (PACI) has embarked on its next phase, focusing on sector-specific solutions to effectively tackle corruption and illicit financial flows, piloting with the real estate and construction sectors.

Combating corruption and illicit financial flows ensures fair competition and fosters economic growth and investment. It also becomes critical for achieving a sustainable future and progressing towards the United Nations Sustainable Development Goals (SDGs).

The United Nations High Level Panel on International Financial Accountability, Transparency and Integrity for Achieving the 2030 Agenda panel reports that money laundering amounts to a staggering $1.6 trillion annually. On a positive note, it is projected that increased efforts by the EU to combat corruption might boost confidence in public institutions and improve regulatory clarity. From a numerical standpoint, this could potentially result in social and economic benefits of as much as €58.5 billion annually.

Corruption has consequences that often extend beyond economic damage – severely impacting human lives and society. Corruption, for example, hampers the alleviation of poverty (SDG 1 - No Poverty) by draining resources vital for financing social programmes and infrastructure development.

In sectors such as urban development, corruption often leads to poor quality and unsafe infrastructure, which can have catastrophic consequences.

How can business advance the fight against corruption and illicit financial flows?

1. Activate Gatekeepers

Corruption and illicit flows cannot be resolved by one actor alone. The private sector can and must play a proactive role, particularly through 'gatekeepers.' Gatekeepers are private sector and often professional service intermediaries, such as real estate agents, banks, lawyers, accountants and wealth managers, that are often the first line of defence in identifying and preventing corrupt practices and illegal transactions.

They can play a critical role by implementing stringent due diligence processes to identify the origins of their client's funds and thorough client and financial background checks. They can also look to understand the nature of their client's businesses and stay alert to any red flags that might indicate illicit activities. Banks, for instance, can strengthen their anti-money laundering (AML) protocols, while real estate agents can scrutinize property transactions for signs of money laundering.

2. Ensure high levels of compliance

Adherence to international compliance regulations and standards, such as those set by the Financial Action Task Force (FATF), is vital. This ensures a unified approach to preventing corruption and strengthens the global fight against illicit flows. Businesses should also foster a culture of transparency within their operations, including clear financial reporting and disclosure of beneficial ownership.

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3. Upskill employees and promote transparency

Regular training for employees (at all levels of seniority) on the risks and indicators of corruption and illicit financial flows helps build a knowledgeable workforce while establishing safe channels for whistleblowing, and protecting those who report unethical practices is also critical. These transformative actions can ripple through an organization, the business network and beyond.

Such training goes beyond internal benefits; it creates ambassadors of integrity, influencing the wider industry and community. A well-trained workforce enhances an organization's reputation and compliance, reduces corporate exposure to risk, and catalyses broader societal and economic transformation. This investment in skill development and transparency can lead to improved public trust and fairer market competition and can even influence regional or national policy, driving sustainable development and growth.

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4. Collective action

The fight against corruption necessitates a multistakeholder approach, transcending mere rule-based compliance. Collective action initiatives facilitate collaboration among private, civil and public sectors to enhance anti-corruption efforts. Professionals, their respective organizations and international professional bodies are crucial in this context. They enforce ethical standards, offer training and enforce compliance within their industries.

Professional bodies, in particular, play a pivotal role in shaping anti-corruption policies and maintaining industry integrity. They can provide training and resources to their members, ensuring that professionals are well-equipped to recognize and combat corruption. By actively participating in these initiatives, professionals uphold ethical practices within their organizations and contribute significantly to the broader goal of combating corruption globally. Their involvement is key to creating a culture of transparency and accountability across various sectors.

The Partnering Against Corruption Initiative goes sector specific

The World Economic Forum’s Partnering Against Corruption Initiative (PACI), launched in 2004, is the primary CEO-led business voice on anti-corruption and transparency. Building on public-private collaboration, PACI leverages a multistakeholder approach to tackle corruption and promote business integrity across sectors and regions.

In its next phase, PACI is embarking on a new sector-specific effort to empower gatekeepers to combat corruption and illicit financial flows. Building on the Unifying Framework and strategically tailoring interventions to specific sectors can make them more effective.

Real estate and banking sectors, for instance, have distinct operational dynamics and risk factors compared to accountancy or legal services. Training gatekeepers within these sectors with specialized know-how and tools ensures they are better equipped to identify and combat sector-specific forms of corruption and illicit flows. The goal is to equip gatekeepers with industry-focused toolkits, the latest in professional, legal and compliance updates, knowledge and upskilling programmes.

PACI will launch this effort with the real estate and construction sectors, which can be primary channels for laundering illicit funds due to the high value of transactions and the relative ease of obscuring ownership. Furthermore, the global nature of real estate investments makes it a cross-border concern, necessitating international collaboration and standardized practices. In construction, frequent interaction with public contracts, cross-border investments, project complexity, and weak procurement controls create opportunities for corruption, impacting public safety and trust.

By starting with these sectors, PACI aims to address critical areas where corruption can have significant economic and social repercussions, setting a precedent for expanding these efforts to other sectors.

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