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Illicit financial flows (IFFs) continue to pose a huge problem, especially for developing countries. One of the main impacts is the hampering of countries’ ability to meet the UN sustainable development goals, because IFFs undermine the fiscal systems which are in place to collect government revenue, and reduce the amount of funds available for development and the provision of public services. In the end, the ones who suffer the most are the ordinary taxpaying public.
The report of the High-Level Panel on Illicit Financial Flows, established in 2012, defines IFFs as the “money that is illegally earned, transferred, or utilized”.
These funds, explained the panel, typically originate from the following sources: commercial tax evasion, trade mis-invoicing, and abusive transfer pricing; criminal activities, including the drug trade, human trafficking, illegal arms dealing, and smuggling of contraband; and bribery and theft by corrupt government officials. Corruption is a particular risk, because not only does it generate illicit funds and exacerbate the likelihood of IFFs, but it also undermines the very institutions that are responsible for detecting, investigating, and prosecuting those IFFs.
To delve deeper into the problem, Corruption Watch (CW) recently undertook a desktop research exercise with a threefold purpose:
- Identify the enablers of IFFs.
- Strengthen monitoring, detection, and reporting of IFFs.
- Enhance awareness and strengthen financial transparency.
The research, published in mid-2026 in a report titled Addressing Illicit Financial Flows, took place under CW’s recent project Countering Cross-Border Corruption and Illicit Finance to Advance Development, which fell under Transparency International EU. The work was aimed at stopping hidden money flows and global corruption, and is of great importance not only in enhancing and strengthening sustainable development, but also in closing loopholes for potential vulnerabilities and risks.
Recommendations
With two case studies included in the report, the team also examined the legal framework relating to IFFs, identified professions that are known to enable IFFs, and made several recommendations on how to tackle the problem:
- The Financial Intelligence Centre should find ways to better support small-medium accountable institutions in complying with their duties, and review the programmes periodically.
- Compliance with the Financial Intelligence Centre Act (FICA) must be more than a box-checking exercise, to ensure meaningful disruptions in the flow of illicit finance.
- FICA could be further amended to reflect that it also focuses on preventing the flow of illicit finance to ensure development.
- The details of immovable property owned by foreign nationals is not readily available. Such information must be recorded and made as readily available regardless of the citizenship or nationality of the parties involved in an immovable property transaction.
- There must be better monitoring of compliance, sanctions, and referrals to prosecution. The investigations and prosecutions must be done in a co-ordinated manner that allow the State to rely effectively on the offences created in various statutes (FICA and the Prevention of Organised Crime Act).
