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BY KATIE - MYGREENPOD, 08 February '16
Regulatory gaps allow banks to finance weapons used to commit human rights violations
There’s little to stop banks from financing and investing in the production and transfer of internationally banned weapons or arms used to commit serious human rights violations, according to an Amnesty International Luxembourg report.
Failures in the sector
The report, Banks, arms and human rights violations, looks into the failures of the Luxembourg financial sector to put in place regulations, policies and procedures to curb financial support for arms-related activities.
While Luxembourg’s banks are in the spotlight, the report’s findings and recommendations are also applicable to other countries in the European Union and elsewhere.
‘Financing and investment are not neutral activities; they shape and facilitate economic activity, including in the arms sector. Banks and other financial institutions have a crucial role to play in the global efforts to stem the manufacture, transfer and use of internationally banned weapons, or the use of authorized conventional arms to commit serious human rights violations and crimes under international law.’
David Pereira, President of Amnesty International Luxembourg
International law strictly prohibits the manufacture, stockpiling, transfer and use of certain types of arms, such as biological and chemical weapons, anti-personnel landmines and cluster munitions, which are regarded as illegal on a permanent basis and under any circumstances.
It also prohibits the transfer and use of conventional arms for serious violations of international human rights and humanitarian law and crimes under international law, such as genocide, crimes against humanity and war crimes.
‘States have obligations and responsibilities under international law to ensure they are not complicit in the perpetration of serious violations of international humanitarian and human rights law, including in the financing of arms production.
‘Banks may also incur liability when they provide financing or investment that supports activities related to internationally banned weapons and arms used to commit crimes under international law and serious human rights violations.’
Gabriela Quijano, Business and Human Rights Legal Adviser at Amnesty International’s International Secretariat
The report shows that, despite its international obligations, Luxembourg has failed to expressly prohibit all financial operations related to internationally banned weapons or conventional arms used in the commission of crimes under international law and serious human rights violations.
The only exceptions have been curbs on financing activities relating to cluster munitions and arms destined for use in terrorism.
The research also shows a lack of transparency in the financial sector’s policies and procedures on arms-related financial activities. Only two of seven top banks operating in the country contacted by Amnesty International Luxembourg provided the organisation with a published policy on financing and investment in the arms sector.
A lack of safeguards
The banks surveyed often appear to have an incomplete understanding of their legal obligations and human rights responsibilities.
Even in cases where international obligations are not yet implemented into domestic law, banks operating in Luxembourg must comply with existing international standards.
‘This report has laid bare the lack of safeguards that would prevent banks from financing internationally banned weapons or arms used to commit or facilitate serious human rights violations or crimes under international law.
‘We hope our findings will kick-start a robust debate among the financial sector, the authorities and the general public, in Luxembourg and abroad, on how to address this serious challenge and to ensure banks are not complicit in such violations.’
Stan Brabant, Director of Amnesty International Luxembourg
The seven banks contacted in the course of this research were: Banque et Caisse d’Epargne de l’Etat, Banque Internationale à Luxembourg, Banque de Luxembourg, Banque Raiffeisen, BGL BNP Paribas, ING Luxembourg, and KBL European Private Bankers.
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