Panel Discusses Illicit Financial Flows from Africa during US Visit

UNECA AU6 February 2013: Members of the UN High Level Panel on Illicit Financial Flows from Africa visited the US to meet with representatives of the US Government, the International Monetary Fund (IMF), the World Bank, the UN, the private sector and others to discuss illicit financial flows. Panel members reported on their mandate, activities and initial findings during a press briefing at UN Headquarters in New York, US, on 6 February 2014.

Thabo Mbeki, former president of South Africa and Panel Chair, outlined the Panel's efforts to understand the origination and destination of illicit financial flows and to develop proposals to address such flows. Out of an estimated US$50 billion in annual illicit financial flows, Mbeki said, multi-national companies account for two-thirds, mostly through tax evasion, while 30% is from criminal activities and 5% is from corrupt officials, though he noted that corrupt officials may also facilitate tax evasion.

At the UN, the panel highlighted cooperation with UN processes, including on financing for development (FFD) and the post-2015 development agenda. Mbeki emphasized that annual illicit financial flows from Africa are greater than official development assistance (ODA) to Africa.

During a session with the panel, UN Deputy Secretary-General Jan Eliasson said illicit financial flows damage Africa's development and governance agendas; “if we can stop Africa from losing resources in illicit outflows, then these funds can be directed to meeting the needs of the continent's people and allowing them to build a better future.” He said the UN is examining how the post-2015 agenda can address illicit flows, tax evasion and asset recovery.

While the panel continues to gather information, Mbeki said he expects recommendations to focus on better global cooperation, creating transparency within financial markets and strengthening institutions and legal regulations to facilitate strong tax authorities. The panel expects to submit its final report in June or July 2014.

Members of the panel responded to questions about, inter alia: asset recovery following the Arab Spring; case studies; and the role of customs services. In response to a question about the rule of law and tightening legislation, Mbkei stressed strong commitment by African leaders to address the issues, while noting that many African countries lack the technical capacity to identify, track and address illicit financial flows. [UN Webcast] [UN Press Release] [UN Deputy Secretary-General Statement] [IISD RS Previous Story on Panel]