The Heat is On

Global Corruption Indicator Shows Bad News for Climate Action

📅 February 24, 2025

The recently released Transparency International (TI) 2024 Corruption Perceptions Index (CPI) highlights that corruption remains a major global threat. This year’s Index shows that although a number of countries have increased their anticorruption scores, three regions declined in their overall corruption levels, and one has marginally improved. The corruption levels in numerous countries have a damaging effect on efforts to combat climate risk.

TI notes that global corruption is strongly linked to the misappropriation of funds that are meant to help countries reduce greenhouse emissions and combat climate change.
Although nations with high CPI scores have the resources to drive action to combat climate change around the world, these countries also are financial hubs that are often misused to launder funds that were misappropriated from programs critical to climate action and are susceptible to influence from companies that are some of the world’s biggest polluters.

Corruption is an evolving global threat that does far more than undermine development – it is a key cause of declining democracy, instability and human rights violations. The international community and every nation must make tackling corruption a top and long-term priority. This is crucial to pushing back against authoritarianism and securing a peaceful, free and sustainable world. The dangerous trends revealed in this year’s Corruption Perceptions Index highlight the need to follow through with concrete action now to address global corruption. — François Valérian, Chair of Transparency International

Corruption Trends and Climate Change

Although some regions around the world are seeing slight overall improvement, more progress is needed to protect climate-risk mitigation efforts, as well as safeguard the global financial system from abuse. More than 30 countries since 2012 reduced their corruption levels, but the average global score of 43 remains stagnant. Although the CPI noted several improvements, such as The Middle East and North Africa, which raised their regional average score for the first time in more than a decade, the improvements were fragile, with an increase of only one point. The scores for several other regions have declined or remained the same.

Western Europe and the EU scored at the top of the CPI last year. However, the region marked an overall decrease for the second year in a row, with numerous leaders serving corporate interests that hinder critical legislation to combat climate-related risks and laws being poorly enforced.
The Americas, according to TI, must urgently address impunity and address the influence of organized crime and corruption in politics. INTERPOL and the UN Environment Programme last year estimated that illegal mining in Latin America, which degrades natural habitats and destroys ecosystems, fueling global warming, generates as much as $48 billion in criminal proceeds per year.
Governments across Asia Pacific have failed to deliver on their anticorruption commitments. Asia Pacific is the world’s most populous region, has the second largest number of young people, and is the region most prone to natural disasters. And yet, corruption has obstructed environmental policy, misappropriated climate funds, and hindered the enforcement of regulations and policies meant to address climate change, leaving the region vulnerable to climate disasters.

Lack of transparency and accountability increases the risk that funds meant to mitigate the effects of climate change will be diverted or embezzled for corrupt gain, threatening the global financial system, according to TI. Non-governmental organization (NGO) OXFAM International last year estimated billions of dollars in financing by the World Bank to fund climate initiatives is unaccounted for. OXFAM reported that its audit of the World Bank’s 2017-2023 climate finance portfolio found that between $24 billion and $41 billion in financing could not be tracked for between the time projects were approved and when they closed.

“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… 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.” — Kate Donald, Head of OXFAM International’s Washington D.C. Office

High Scorers Are Corruption Targets

For several years in a row, TI has highlighted “trouble at the top,” noting that the world’s advanced economies are targets for illicit actors to launder and hide assets. Denmark in 2024 has once again topped the CPI ranking with a 90/100 score, with Finland and Singapore taking second and third place with 88/100 and 84/100 respectively. This does not, however, mean that there’s no risk of corruption in these countries. A high score means that a country is perceived to have low levels of public-sector corruption, but these countries are still exploited by corrupt financial actors.

TI analysis late last year revealed that billions of dollars misappropriated from infrastructure projects have been transferred into offshore accounts, luxury real estate, and accounts in western countries.
Western financial hubs, such as Switzerland, which scored 81/100 in this year’s CPI continue to face scrutiny for facilitating illicit financial transactions.

High-scoring, non-western financial centers such as Hong Kong (74), Singapore (84), and the UAE (68) also warrant closer attention for their increasing roles in facilitating the movement of illicit assets. Although these jurisdictions boast relatively strong rule of law and well-functioning institutions (the UAE was removed from the FATF grey list last year), their banking laws, corporate structures, and secrecy provisions can enable financial criminals to move assets without detection, with real estate being a major tool for laundering illicit funds.

Case Study: Carlos Manuel de Sao Vicente

Angolan businessman Carlos Manuel de Sao Vicente in 2022 was sentenced to nine years in prison for embezzlement, tax fraud, and money laundering. Authorities alleged that Sao Vicente embezzled funds from business conducted with foreign oil companies operating in the country. Sao Vicente had an account at the Bank of Singapore containing more than $558 million and two accounts at the same bank registered to his wife and his son, which had more than $15 million combined.

A judge in November denied Sao Vicente’s request to unfreeze $2.6 million for his legal expenses, citing the difficulty in assessing the extent of Sao Vicente’s wealth because of numerous transfers of funds between his bank accounts and the international nature of his assets.

Sao Vicente, the son-in-law of Angola’s first president, had accounts in the UK, Switzerland, and Singapore and owned or controlled numerous companies in Angola, the UK, Bermuda, and Portugal.

Bank accounts in Hong Kong, Switzerland, the UK, the UAE, the United States, and other high-scoring countries are used to pay bribes and move or store illicit proceeds, with corrupt officials from Africa often using financial centers with high CPI scores as destinations for misappropriated funds. TI last year found that more than $3.7 billion in funds linked to corruption from Africa were found hidden in wealthy nations, such as the UK, using anonymous entities.

The Organized Crime and Corruption Reporting Project (OCCRP) late last year wrote that accounts at a major bank in Luxembourg, which scored an 81 in the CPI for last year, played a “central role” in moving funds from an embezzlement scheme that resulted in the arrest and imprisonment of the former chairman of the International Bank of Azerbaijan.
In addition, the world’s “cleanest” countries also can be used to sully clean money, turning it into bribes and kickbacks, as well as funds for terrorist organizations, according to the Basel Institute on Governance.

Mitigation strategies

Financial institutions and other firms in high-scoring jurisdictions should monitor transactions that may be linked to corruption in lower-scoring countries. Luxury purchases and real estate in these financial centers often face less scrutiny precisely because of their high anticorruption scores.

When possible, beneficial ownership of accounts and companies should be determined, and transactions involving secrecy jurisdictions that have lax disclosure requirements for ownership or control should warrant closer scrutiny.

The Basel Institute on Governance recommends that financial integrity professionals gain a better understanding of methods used to move proceeds of corruption, including how methodologies to launder money, such as the use of shell companies, offshore financial centers, and informal value transfer service providers, can also be used to “dirty funds.”

Closely examine transactions tied to the green minerals sector that involve lithium, cobalt, copper, nickel, and rare earth minerals and that is known for vulnerability to corruption. Ties to government officials, the use of unnecessary or unqualified middlemen, and countries with weak controls over resource management could indicate corruption.

This year’s Transparency International Corruption Perceptions Index shows that although a number of countries have increased their anticorruption scores, three regions declined in their overall corruption levels and only one has improved. The corruption levels in numerous countries have a damaging effect on efforts to combat climate risk.

For further reading, check out our article The Green Gold Rush on corruption risks in the green transition mining and minerals industry.

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