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Working Meeting on Illicit Financial Flows

Building Knowledge on SDG 16

Turin -

A technical meeting on measuring the Illicit Financial Flows (IFFs) took place in Turin on 25 October 2018. The meeting was organized within the framework of the programme Building Knowledge on SDG 16 that UNICRI is implementing thanks to the support of Compagnia di San Paolo. This programme aims to enhance knowledge on the progress and challenges associated with measuring and achieving Goal 16 of the United Nations 2030 Agenda for Sustainable Development. It also establishes a platform for dialogue to explore the current challenges of IFFs, as well as to discuss realistic projections of the position that the international community could grant to the IFFs in the near future.

Illicit financial flows have immense implications for the achievement of peace, security and development. However, there is still no agreement on what kind of financial transactions IFFs comprise. The origin of the debate rests on the fact that the very composition of the term IFF can transcend the legal arena to enter the field of morality.

Scholars and practitioners, reinforced by civil society organizations, tend to consider part of this category aggressive tax practices undertaken by international corporations to reduce the levy through legal loopholes and sophisticated strategies. This controversy is clearly not new and is particularly familiar to most scholars and practitioners working in the field of international cooperation, who have contributed in important ways to the search for a consensual position on what can be labelled as IFFs. The lack of a harmonized conceptual framework concerning IFFs has not been an impediment for the different institutions and organizations to undertake estimations on the volume of IFFs according to their understandings of the matter. The UNICRI research project on IFFs contributes to the international effort to analyse cross-border financial movements by providing additional framework to understand the drivers of these flows.

The working meeting convened by UNICRI addressed the ambiguity of IFFs and promoted the development of a comprehensive analytical framework to advance our knowledge of different types of IFFs. The meeting highlighted the need for a disaggregated approach to IFFs that analytically separates aggressive tax abuse through profit shifting from other types of illicit financial flows, such as trade misinvoicing or laundering of proceeds from criminal activities.

The complexity and diversity of the phenomenon of IFFs requires a closer look at specific socio-economic and political contexts, paying attention to local characteristics of each country impacted by the illicit outflows. Cross-border financial movements related to tax evasion and tax avoidance, to the abuse of commercial transactions, and to the theft of state assets, among others, seem to be produced in economic and political environments with comparable characteristics. During the meeting it was discussed if the analysis of comparable drivers, such as the low quality of the regulatory framework of a given context, the dependence on natural resources, the political and economic instability or the high level of fiscal pressure, among others, could represent a basis for the context-specific approach on IFFs. The working meeting was attended by a variety of high level experts, providing for a comprehensive perspective on IFFs.

Participants included: Ms. Bettina Tucci Bartsiotas, Director a.i of UNICRI; Prof. Peter Reuter, University of Maryland; Prof. Bruce Bagley, University of Miami; Prof. Tommaso Faccio, University of Nottingham; Ms. Itziar Arispe, Programme Coordinator of UNICRI; Ms. Yulia Vorobyeva, Fellow of UNICRI; María Dolores González Sepúlveda, Director General Deputy Secretary Ministry of Finance and Public Credit of Mexico; Mr. Peter Bishop, Executive Director Analytical Forensic Investigation Services, South Africa; Ms. Beulah Chelva, Statistician, IFFs programme, UNCTAD; Mr. Stuart Page, Director Enigma Alliance; Mr. Juan Pablo Aguirre, Instituto Belisario Domínguez, Mexico, and Mr. Leif Villadsen, Senior Programme Officer of UNICRI.