A significant proportion of DFI financing is channelled through financial intermediaries (FIs) such as national and commercial banks in developing economies, microfinance institutions, and private equity funds. These types of institutions allow DFIs to significantly broaden their scope and reach more clients by effectively disaggregating finance to a scale suitable for smaller stakeholders such as SMEs. However, the introduction of an additional step in the financial value chain has implications for transparency; the extent and detail of sub-project disclosure is almost always less than that with direct investments. The use of offshore financial centres (OFCs), often classified as tax havens, has been a controversial aspect of DFI investment. OFCs commonly have strict banking secrecy laws resulting in limited levels of transparency which has implications for issues such as the disclosure of beneficial ownership of client companies.
/ / Work Stream 5: Financial Intermediaries, Offshore Financial Centres & Beneficial Ownership