G7 Fails to Make Progress on Illicit Financial Flows

Washington-based advocacy group, Global Financial Integrity (GFI) is disappointed in world leaders for failing to advance efforts to curtail illicit financial flows, particularly in the context of the post-2015 Development Agenda. The G7 failure comes despite a new GFI study released on June 10 showing the outsized-impact that illicit financial flows (IFFs) have on the poorest countries in the world, and notwithstanding a pledge by UK Prime Minister David Cameron to put corruption on the agenda of the G7 Summit, which was concluded in Germany on June 8.

“We are very disappointed in the G7’s inaction on the issue of illicit financial flows,” says GFI Managing Director Tom Cardamone, an expert on international financial crime. “While crime, corruption, and tax evasion pose a serious threat to advanced economies—such as those represented in the G7—they have an outsized impact on the poorest countries in the world. With the UN’s Financing for Development (FfD) Conference just over a month away, failing to take a strong position on illicit flows—the most damaging economic problem plaguing the developing world—is a huge opportunity missed,” he notes.

Indeed, a study released by the GFI, which has been leading the policy debate on illicit financial flows, found that dirty money drains roughly US$1 trillion from developing and emerging economies each year. Its study tracks illegal outflows between 2008 and 2012 from 82 of the poorest countries in the world.

It found, unsurprisingly, that in African, Asian and Latin American countries where inequality and poverty levels are high, illicit financial flows are also high.

Twenty of the nations analysed, including Indonesia, had illicit flows amounting to more than the combined total of foreign aid and foreign direct investment.

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