Unlocking the black box of political will on IFFs: Going beyond technical responses
Project Live
PROJECT TEAM
Tuesday Reitano
Global Initiative Against Transnational Organized Crime
Contact: tuesday.reitano@globalinitiative.net
Tuesday Reitano is Deputy Director at the GI-TOC and a senior research advisor at the Institute for Security Studies in Pretoria, where she leads the ENACT programme on behalf of the GI-TOC. Tuesday was formerly the director of CT MORSE, an independent policy and monitoring unit for the EU’s programmes in counter-terrorism, and for 12 years was a policy specialist in the UN System, including with UNDP, UNDG and UNODC.
Michael McLaggan
Global Initiative Against Transnational Organized Crime
Contact: michael.mclaggan@globalinitiative.net
Michael McLaggan is a full time analyst at the GI-TOC in Cape Town. He is currently involved in work relating to illicit charcoal trading in East Africa and work in the firearms trade in South Africa. Michael holds a Bachelor of Social Sciences and Bachelor of Laws from the University of Cape Town, as well as a Master of Laws in Criminology, Law and Society, also from the University of Cape Town.
Kristina Amerhauser
Global Initiative Against Transnational Organized Crime
Contact: kristina.amerhauser@globalinitiative.net
Kristina Amerhauser is a Programme Manager for Asia-Pacific at the GI-TOC and is based in Bangkok, Thailand. She conducts research on topics such as illicit financial flows, money laundering, mining and how to strengthen civil society resilience against organized crime. Before joining the Asia-Pacific team, she worked for 3.5 years with the GI-TOC covering the Western Balkans, where she contributed and authored research on the role of gender, drug trafficking, the smuggling of migrants and illicit financial flows.
PROJECT SUMMARY
The harms on economies and societies are significant when proceeds of crime and corruption are moved unimpeded through the global financial and trade systems. As policymakers are looking to identify ways to respond better to illicit financial flows (IFFs), this research project seeks to better understand what enables IFFs, if there is political will to address IFFs and what interventions have been successful in addressing IFFs as part of a politically sensitive approach.
The overarching conclusion of the initial research was that the line between business, politics and crime has never been more blurred. As a consequence, the majority of IFFs are not in fact illegal, but instead benefit from policies designed to create loopholes for a cadre of wealthy, politically connected elites to preserve and grow their wealth and move their assets, free of taxation and oversight and almost entirely beyond the sight and reach of regulatory bodies and law enforcement. States that have become compromised by illicit money have become spoilers in the multilateral system, hampering the ability to establish common frameworks and norms to govern IFFs and the systems that enable them. This closes the loop on protecting those who benefit most from the system.
The research further found that the term IFFs is often used synonymously with money laundering and therefore conceptually restricted to the flow of money, for which the anti-money laundering regime is seen as the antidote. Conversely, research on the ground shows that physical flows of (illicit) trade and trade-based money laundering are very significant sources of financial value transfer, and there is insufficient connection made between IFFs and trade, particularly in the framing of responses. It moreover finds that informality also contributes significantly to creating an enabling environment for IFFs.
Drawing from the evidence review, this research project proposes a framework, the so-called ‘IFFs pyramid’, to explain the three dominant means by which IFFs are enabled, moved and held: financial flows, trade flows and informal flows. In its second phase, the research project has tested the use and applicability of this framework in East and Southern Africa and the Mekong region.
PUBLICATIONS
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Political won’t? Understanding the challenges of countering IFFs: a global evidence review (SOC ACE Research Paper RP14)
Addressing illicit financial flows in East and Southern Africa (SOC ACE Research Paper RP29)
Illicit financial flows in the Mekong (SOC ACE Research Paper 30)
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The challenges of responding to IFFs where political will is absent: a synthesis evidence review (SOC ACE Briefing Note BN20)