Illicit Financial Flows

currencies

The Illicit Financial Flows (IFF) Project

This is the flagship venture of ASAP’s larger Institutional Reform Goals project.  It aims to  establish a financial transparency and IFF-curtailing goal as part of the post-MDG framework. Its key objectives are to:

  • Produce research-based discussion and policy papers that argue for and articulate a politically feasible IFF goal
  • Build a broad coalition of academics, civil society organizations and corporations that will support the IFF goal
  • Present and promote the IFF goal in the upcoming UNDP thematic consultations on the post-MDG framework.


Overview of Key Issues

For the purposes of our project, illicit financial flows are cross-border financial flows that leave developing countries and go to developed countries, contrary to (the letter and spirit) of domestic and international laws.  There are three broad types of illicit flows: corrupt, including the proceeds of bribery and theft; criminal, including the proceeds of activities such as drug and human trafficking; and trade-related, including different kinds of tax-avoiding activities.  It is estimated that, every year, $1 trillion is spirited out of developing countries through corruption, smuggling, money laundering, and corporate tax evasion. These illicit flows dwarf the flow of development assistance to developing countries, and are said to have removed $10 for every dollar spent on overall development aid, and $80 for every dollar spent on basic social services.  By taking advantage of weak rules governing financial transactions, corporations, racketeers, and corrupt officials do not merely enrich themselves. They aggravate poverty and oppression by weakening the institutions that are intended to sustain the rights and livelihoods of the poor. This deprivation constitutes a massive violation of human rights.

To learn more about IFFs, and what has been done so far to curtail them, watch Global Financial Integrity (GFI) Director Raymond Baker’s address at the ASAP-sponsored Human Rights and Economic Justice conference at Yale University on October 18, 2013: