By Marta Castillo
Illicit financial flows are gaining recognition as an important issue for development. As 2015 and the expiration of the Millennium Development Goals draws nearer there are calls both from civil society and from within the UN system to make control of such flows a priority within the Sustainable Development Goals (SDGs). There is still an open debate as to the role they should play in the world’s sustainable development agenda.
Illicit financial flows are international movements of funds illegally earned, transferred or utilized. Examples include the proceeds of crime and corruption and funds involved in tax avoidance and evasion schemes. Evidence suggests that developing countries are losing very large amounts of money to illicit financial flows. According to Global Financial Integrity, illicit flows from developing countries totaled $946.7 billion in 2011, and $5.9 trillion cumulatively from 2001 to 2011. This is roughly ten times the amount of money developing countries received in official development assistance. As a result of these losses, the affected countries are less able to finance infrastructure development and provide essential services such as healthcare and education.
Recent UN reports identify the importance of addressing illicit financial flows in the Sustainable Development Goals (SDG). For instance, in its report to the UN General Assembly, the High-Level Panel on the Post-2015 Development Agenda stated that the new framework should be used to bring about “a swift reduction in corruption, illicit financial flows, money-laundering, tax evasion, and hidden ownership of assets”. Beyond 2015, a global coalition of over 1,000 civil society groups working to influence the SDGs, has also called for the new framework to establish policy responsibilities for countries to stem illicit financial flows. The Open Working Group on Sustainable Development Goals has also proposed that the SDGs confront illicit financial flows. Its proposal for the SDGs, which includes 17 goals and 169 targets, refers to illicit financial flows and related tax and governance issues in three targets. These are:
- 16.4 by 2030 significantly reduce illicit financial and arms flows, strengthen recovery and return of stolen assets, and combat all forms of organized crime
- 16.5 substantially reduce corruption and bribery in all forms
- 17.1 strengthen domestic resource mobilization, including through international support to developing countries to improve domestic capacity for tax and other revenue collection
Importantly, aside from strengthening domestic capacity for tax collection, the proposal from within the UN system have focused solely on the desired outcome of reducing illicit financial flows without specifying the actions to be taken in order to achieve that reduction. If the new framework does not identify specific measures to be taken by specific actors, it risks losing its effectiveness. In an effort to help identify which measures should be taken, ASAP is conducting a Delphi study on how SDGs can be formulated to make the greatest possible impact on illicit financial flows.
The aim of a Delphi study is to gain insight into complex problems by systematically making use of expert and stakeholder opinion. In a study, participants respond anonymously to a series of questionnaires, and after each round, a summary of the results is sent back to the group. Participants are encouraged to revise their original responses in light of others’ answers, and over a series of rounds, responses may converge around an area of consensus.
Participants will respond to three rounds of questionnaires, assessing policy responsibilities that could be included in the post-2015 development framework. They will be asked to name policies that could lead to a reduction in illicit financial flows and to discuss the feasibility and desirability of implementing such policies globally. Over the course of the study, we hope to discover policy options receiving the greatest support among experts and stakeholders as well as their reasons for supporting.
The first round of questionnaires is completed, with 21 people with expertise related to illicit financial flows and the post-2015 policy landscape participating. The final results of the study will be published in August.
The study is funded by donations from ASAP members, contributed during the crowdfunding campaign “Stop IFFs 2015”.
If you would like to learn more about the study, please contact Rachel Payne at firstname.lastname@example.org.