Asset disclosure (AD) systems—also referredto as financial disclosure or asset declara-tions—can play two important roles withinbroader anticorruption efforts: preventionand enforcement. On the prevention side,AD requirements can help bring to light con-flict of interest risks faced by public officialswho file ADs, thereby facilitating the avoid-ance of conflict of interest situations. On theenforcement side, AD requirements can pro-vide one more source of information thatmay be used in the investigation and prosecu-tion of suspected illicit enrichment cases,thereby aiding asset recovery efforts. Effectivecollaboration, both domestically and interna-

tionally, between policy makers and practition-ers is essential for such benefits to materialize.

Recent empirical work on AD policiesand practices highlights five key trade-offsthat must be addressed, and it suggests prin-ciples that should guide policy makers asthey address those trade-offs: 1. limit coverage to improve odds of success;2. set modest and achievable expectations,

rather than ambitious objectives that areunlikely to be met;

3. provide resources commensurate with themandate;

4. prioritize verification procedures to alignwith available resources; and

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Salient Issues in Income and Asset Disclosure Systems: Lessons Learned from the Field inPreventing Conflict of Interest andCombating Illicit EnrichmentRuxandra Burdescu, Gary Reid, Stephanie Trapnell, Dan Barnes, Modest Kwapinski,and Tammar Berger

“Income and Asset Declaration systems can be a powerful tool to prevent corruption and detect the theftof public assets. . . . We should never forget the reason we create these systems. As part of an overall anti-corruption strategy, they help ensure that scarce resources are spent honestly and wisely. In this way, wehelp citizens get the health care, the education, the roads and the quality of life they have paid for and de-serve. And . . . this attention to good governance acts as a reinforcing foundation for prosperity and sta-bility.”–Otaviano Canuto, PREM vice president

The World Bank

5. balance privacy concerns with public ac-cess to declarations.

Background and AD ReferenceToolsIn an effort to broaden the approach to assetrecovery and to link it properly with gover-nance and anticorruption strategies, the Sto -len Asset Recovery (StAR) Initiative—a part-nership between the World Bank and theUnited Nations Office on Drugs and Crime—commissioned the preparation of a guidefor policy makers and practitioners in thefield of asset and income declarations. Theproject was developed in partnership byStAR and the Public Accountability Mecha-nism under the Actionable Governance In-dicators (PAM-AGI) initiative in the PublicSector Governance Group of the World Bank.The report Income and Asset Declarations: Toolsand Trade-Offs was presented in November2009 for consultations in Doha during the VIGlobal Forum on Fighting Corruption andthe Third Conference of the States Parties tothe United Nations Convention against Cor-ruption.

In an effort to identify how best to de-sign and implement an AD system, that re-port recognizes that each country ultimatelymust design a system that is tailored to theenvironment in which it will function. Assuch, the study analyzes some of the trade-offs faced by policy makers and practitionersalike in designing and implementing an op-timal AD system in a particular context.

That report complements the PublicSector Governance Group’s development ofAGI, which include a set of indicators forboth the legal framework and implementa-tion of AD systems. These indicators areavailable to World Bank staff for monitoringand evaluating AD policies and proceduresand for engaging in dialogue with clientcountries; they also are available to other in-terested parties outside the Bank.

These indicators can be found on therecently launched AGI data portal and thePAM-AGI Web site, both of which providepowerful tools to explore consolidated dataand indicators on governance in clientcountries, including the AD legal frame-works in 87 countries. (For a select numberof descriptive AGI-PAM statistics, see box 1.)

Actions to Address Key Trade-offsin Design and Implementation of ADSystems As mentioned at the beginning of this note,in the context of work on AD policies andpractices, there are at least five key trade-offsand several principles that should guide pol-icy makers and practitioners when address-ing those trade-offs. They are detailed below.

Limit coverage to improve odds of successThe extent and breadth of an AD system’scoverage can compromise its effectiveness,particularly if resources devoted to that sys-tem are limited. Limiting coverage to posi-tions most at risk for significant conflicts ofinterest or illicit enrichment can provide animportant option for ensuring a system’s ef-ficacy and cost effectiveness. It is imperativethat governments craft an approach thattakes into account the need to limit coverageso the capacity of the implementing agencyis not overstretched and to target that cover-age where the risk of corruption or conflictof interest is greatest.

Set modest and achievable expectations,rather than ambitious objectives that areunlikely to be metRealistic expectations about the outcomes ofan AD system can significantly improve the sys-tem’s credibility with stakeholders, thereby en-hancing its odds of success. The failure of ADsystems to live up to expectations—particularlyif swift and comprehensive outcomes werepromised—can ruin the sustainability of re-

PReMnOTe2 june 2010

Figure B.1. How Is Declaration Content Verified?

Sh

are

of sa

mp

le w

ith

a le

ga

lfr

am

ew

ork

fo

r A

D (

%)

70

60

50

40

30

20

10

0

head ofstate

ministers MPs civilservants

form efforts. For this reason, it is of fundamen-tal importance that expected outcomes beachievable. To address this challenge, policymakers may limit coverage, set realistic timeframes for reaching clear milestones, andavoid promising to significantly reduce cor-ruption and/or successfully prosecute corrup-tion cases with the AD system alone.

Provide resources commensurate with themandateWithout adequate resources, even the best-designed AD system functions poorly. Notonly should an AD unit’s budget remain in-

dependent from other entities, provide foradequate resources to support the system,and ensure continuity of funding; but theunit also needs to have properly trained per-sonnel, secure and functioning facilities,and the ability to monitor the system.

What is typical in practice is modest or lit-tle financial support for AD implementation.In many cases, this is symptomatic of broaderbudgetary constraints for the government. Inthe Kyrgyz Republic, for example, severalstaff expressed a concern that financing fromthe budget is not adequate to address thenumber of declarations received. The salaries

PReMnOTejune 2010 3

Box 1: The Limits of Good Practice

Source: Public Accountability Mechanisms (PAM) Initiative, Income and Asset Disclosure legislative indicator dataset,

2009: https://www.agidata.info/pam.

explicit criteria and standards areestablished to verify accuracy ofdeclarations

a specific agency is responsible forverifying content of declarations

Figure B.2. Where Are Declarations Accessed?

agency (hard copy)

online

officialgazette

media(print/online)

not specified

0 5 10 15 20 25 30 35 40 45

percent

Figure B.3. How Long Are Records Maintained?

< 6 years

6–10 years

10+ years

not specified

0 10 20 30 40 50 60 70 80 90

percent

Whereas most countries with an AD system apply

the “good practice” elements of an AD legal frame-

work, there are some notable exceptions: Less than

30 percent of countries specify in legislation the ex-

plicit criteria for verifying the content of declarations

(figure B.1). Only 11 percent of countries with an AD

framework require free provision of declaration con-

tent. Fully 40 percent of countries fail to specify a lo-

cation at which declaration content may be accessed

(figure B.2). Fully 82 percent of countries fail to spec-

ify how long AD records must be maintained (figure

B.3). Although nearly 60 percent of countries identify

an agency tasked with verification or review of decla-

rations, no more than 30 percent of countries specify

explicit criteria for his responsibility in the legislation.

of the officers of the Civil Service Agency—like those of all other civil servants—are quitelow in comparison with the cost of living.

Beyond mere monetary resources, it isalso important to consider the staffing needsrelative to the number of declarations to becollected or analyzed. For instance, Mongo-lia’s Independent Agency Against Corrup-tion (IAAC) has a dedicated 10 staff mem-bers who are directly responsible for thedeclarations of the 256 highest public offi-cials (a 1:25 ratio); ultimately, they are re-sponsible for a total of 52,000 declarations(a 1:5,200 ratio) submitted each year. Forcomparison purposes, Kyrgyzstan has a staffof 4 responsible for 17,000 declarations(1:4,250 ratio), Argentina has a staff of 12 re-sponsible for 34,000 declarations (1:2,833ratio), and Croatia has a staff of up to 27 re-sponsible for 1,800 declarations (1:66 ratio).As these numbers suggest, the ratio of per-sonnel to declarations can vary wildly amongcountries. The key issue is what these staffare expected to do with those declarations.

Argentina has tried to institute an elec-tronic system for verifying the declarations,easing the demands on individual staff.Mongolia has decided to focus resources onthe declarations of the top 256 officialsthere, and to devolve some responsibilitiesfor the remaining declarations to ethics offi-cials within individual government agencies.Other countries, recognizing the staffingshortages they may face, have chosen to con-centrate on submission compliance ratherthan verifying the accuracy of declarations.These are significant trade-offs that must beconsidered when designing and implement-ing a system.

Prioritize verification procedures to alignwith available resourcesA well-designed AD system requires timely re-view of the content of declarations by a quali-fied and impartial official. Without monitor-ing and verifying data, the process of filling

out declarations can easily become nothingmore than a meaningless formality. However,AD verification is one of the hardest parame-ters to implement. For that reason, it is wiseto take a multitiered approach to verification,beginning with the first tier and encompass-ing the succeeding tiers as resources and au-thority permit. These are the suggested tiers:• Tier 1: Simple checks for both completeness

and consistency of the information containedin submissions. Irregularities or inconsis-tencies within a single AD form or in ADforms over time can alert an experi-enced reviewer to potential breaches ofethics or criminal behavior, particularlyif the law allows the reviewer to followup and seek clarification or corrobora-tion. If resources prevent undertakingthese simple checks for all declarations,tier-1 checks on a high-risk subset of thedeclarations can provide significantbenefits at a fraction of the cost.

• Tier 2: Cross-checking data with other sourcesof related information. A careful cross-checking review can reveal discrepanciesbetween asset declarations and othersources, such as property registries, taxdeclarations, and other databases. To beeffective, the AD agency needs to havethe authority and the capacity to con-duct such checks, and the informationfrom external sources needs to be avail-able and reliable.

• Tier 3: Computerized pattern recognitionchecks. Electronic AD review systemsequipped with data-mining software en-able implementing agencies to conductrandom and risk-targeted verifications ofasset declarations and to “red-flag” pat-terns or irregularities that might escapethe notice of even the most diligent re-viewers. Electronic submission and verifi-cation procedures thus can significantlyenhance the effectiveness of AD systemsby enabling reviewers to select and prior-itize specific risk categories.

PReMnOTe4 june 2010

All three of these verification tiers can befacilitated by establishing user-friendly submis-sion systems that ensure information is provid-ed in a consistent format (making it easier to re-view). In an information technology–enabledenvironment, capturing returns in electronicform can automate checks of completenessand consistency. Such uniform formattingand electronic filing can reduce delays causedby incomplete or incorrect declarations andreduce content verification costs.

Balance privacy concerns with public accessto declarationsEven in countries where the AD mechanismis acknowledged as a powerful tool to preventconflicts of interest and to combat corrup-tion, the tension between granting public ac-cess to asset disclosure information and an of-ficial’s right to (or concerns about) privacyoften emerges as a controversial issue. Al-though citizen privacy is accepted in somecountries as a fundamental individual right,privacy rights may hinder the effectiveness ofsome disclosure systems—particularly thosethat lack rigorous verification procedures andtherefore depend all the more on publicscrutiny for effective enforcement or systemsin countries where the enforcement of lawsagainst illicit enrichment is weak or unreli-able. In an attempt to resolve the debate be-tween public availability and privacy, some ex-perts suggest that a distinction be madebetween different categories of informationcontained in a financial disclosure. Such adistinction would allow public access only to asubset of that information—namely, informa-tion deemed not to compromise privacyrights or personal security. (See box 2 forcountry-specific examples.)

Snapshots of AD ImplementationContexts: Argentina and MongoliaSince its passage in 1999, the AD system forArgentina’s executive branch of governmenthas achieved significant success in compli-

ance and implementation. The AD systemwas designed to enable verification of decla-rations from the most senior 5 percent ofpublic officials, and the systematic and tar-geted audit of the other 95 percent of offi-cials on the basis of risk. The categories ofrisk include declarations that demonstratesignificant changes in asset values over time(revealed through electronic data mining),and employees of certain ministries where therisk of engaging in corruption is higher (suchas taxation departments, customs agencies,and the like).

Although sanction enforcement chal-lenges remain—largely because of bottle -necks in the court system—some of Argenti-na’s procedures may represent good practice.The country’s experience is also a good ex-ample of (1) an AD system whose proce-dures have been adjusted and honed overtime through learning by doing; (2) a strongframework for coordination between the

PReMnOTejune 2010 5

Box 2: Highlights of Some AD Systems

Guatemala’s Probity Law ensures complete confi-

dentiality of asset declarations, except by court or-

der. This ban extends to government entities, in-

cluding the Prosecutor’s Office. Given the limits this

places on the use of the declarations, it might be

preferable to improve interagency cooperation for

the purpose of criminal investigations, rather than

to ban access to declarations.

Similarly, the AD system in Macao, China, re-

mains completely confidential. However, declara -

tion information has been used successfully to

prosecute corrupt officials charged with illegal en-

richment, and so it may contribute to public faith in

the system. It is important to note, however, that

this system has achieved its level of success in an

environment characterized by a strong rule of law.

On the other side of the spectrum, Hong Kong,

China; Kyrgyzstan; and Mongolia use a tiered pub-

lic access model, granting access according to the

seniority of the declaring official. Mongolia, in par-

ticular, requires investigations of any official’s asset

declaration if an allegation of inaccuracies on the

declaration is lodged against the official by any

member of the public.

verification and investigation functions ofthe AD system; and (3) the power toconduct investigations into underlying actsof corruption, in which asset declarationsmay play an important part.

Mongolia’s experience is a good exam-ple of gradual implementation of an AD sys-tem in its early stages. The law created IAAC,which is responsible for managing the ADprogram. Entering its third year of existence,IAAC has achieved significant progress inrelatively little time, reporting a 99.9 percentsubmission compliance rate. Despite its suc-cess on this front, IAAC has faced some chal-lenges with regard to resources and obtain-ing cooperation from outside agencies andbanks.

Although granted authority to verify anydeclaration at its discretion, IAAC is specifi-cally required to analyze the declarations ofofficials who are the subject of an officialcomplaint. Because this approach is not aparticularly systematic approach to “risk-based targeting,” it is a good idea to comple-

ment such requirements with a systematictargeting of verifications, even if the system-atic algorithm is simply a random sample ofall filings.

About the AuthorsRuxandra Burdescu is special assistant to the WorldBank managing director. Gary Reid is lead public sectorspecialist in the World Bank Public Sector and Gover-nance Anchor of the Poverty Reduction and EconomicManagement Network. Dan Barnes, Tamar Berger,Modest Kwapinski, and Stephanie Trapnell are gov-ernance consultants with the World Bank.

The conference edition of this report is available athttp://siteresources.worldbank.org/EXTSARI/Resources/5570284-1257172052492/ADincomeasset.pdf?resourceurlname=ADincomeasset.pdf. This note is adapted fromthat publication. For the full report, see http://web.world-bank.org/WBSITE/EXTERNAL/TOPICS/EXTSARI/0,,menuPK:5570290~pagePK:64168427~piPK:64168435~theSitePK:5570285,00.html. The AGI data portal can bereached at https://www.agidata.info, and the PAM-AGIWeb site is https://www.agidata.info/pam.

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