Addressing Illicit Financial Flows in East and Southern Africa
January 2024
Research Paper 29
Michael McLaggan, Global Initiative Against Transnational Organized Crime (GI-TOC)
SOC ACE Project: Unlocking the black box of political will on IFFs: going beyond technical responses
PUBLICATION SUMMARY
This research paper forms the second phase of the SOC ACE project “Unlocking the black box of political will on IFFs: going beyond technical responses”. Drawing from an evidence review, the research project initially proposed the ‘IFFs pyramid’ framework, to explain the three dominant means by which IFFs are enabled, moved and held: financial flows, trade flows and informal flows.
In this second phase, the project has tested the use and applicability of this framework in East and Southern Africa and the Mekong region (see Mekong paper here). This paper draws on extensive research by the Global Initiative against Transnational Organized Crime (GI-TOC) – in particular, the Observatory of Illicit Economies in East and Southern Africa – in addition to research by other international organisations, to analyse whether the ‘IFFs pyramid’ proposed by the GI-TOC (Reitano, 2022) is applicable to and useful for researchers seeking to understanding illicit financial flows in various settings around the world but especially in regions where greater levels of informality exists, such as East and southern Africa.
The paper highlights the pervasive informality of markets in the East and southern African region, and their abuse by criminal actors, means that greater attention to IFFs is necessary in this sphere. Illicitly acquired or traded commodities are commonly used in barter (goods for goods) markets. State-embedded actors play a significant role in facilitating IFFs and obstructing anti-IFF policies. Furthermore, vested interests of criminal actors in keeping certain industries and markets informal serve as barriers to formalisation and highlight the greater need to pay attention to informal financial flows especially.