July 15, 2015
Christine Clough, PMP
Governments Commit to “Substantially Reduce Illicit Financial Flows by 2030”
Development Accord Seeks to Curb an Estimated $1 Trillion in Annual Outflows
ADDIS ABABA, Ethiopia – Global Financial Integrity (GFI), the Africa Progress Panel (APP) and Jubilee USA applauded the global commitment made today at the Third Financing for Development Conference (FfD3) to reduce the massive flow of illicit funds from developing country economies. For the first time international consensus was reached on the importance of an issue that has been at the forefront of efforts by hundreds of research and development organizations for the last ten years. The negotiations concluded today and formal adoption of the document will take place on Thursday.
Specifically, the FfD3 Outcome Document requires member states to “redouble efforts to substantially reduce illicit financial flows (IFFs) by 2030, with a view to eventually eliminate them, including by combatting tax evasion and corruption through strengthened national regulation and increased international cooperation.” Additionally, the final text calls on “appropriate international institutions and regional organizations to publish estimates of IFF volume and composition.” The ability to measure illicit flows was at the heart of significant disagreement during the FfD3 preparatory negotiations in New York earlier this year with the G77 countries calling for country-level estimates of illicit flow volumes.
“This language is an affirmation that illicit flows have a corrosive impact on development and is a recognition that significant global focus is required to address the problem if the Sustainable Development Goals are to be met,” said Tom Cardamone, Managing Director of Global Financial Integrity. In a recent GFI study, titled Illicit Financial Flows and Development Indices: 2008-2012, the extent to which IFFs can undermine an economy was underscored given that twenty of the world’s poorest nations have illicit flows that are greater than receipts from development aid and foreign direct investment combined.
Former UN Secretary-General Kofi Annan noted today that “stemming the hemorrhage of finance lost through illicit financial transfers will be a key driver of domestic resources that can be used for future development.” Annan is Chairman of the Africa Progress Panel whose recent report People, Power, Planet highlighted the impact illicit flows have on the continent of Africa. The report calls on the international community to “support African efforts to strengthen tax and customs administration and reduce illicit financial outflows, especially via trade misinvoicing.”
Jubilee USA, an alliance of more than 75 US organizations and 400 faith communities working to protect the globe’s most vulnerable people, has played a significant role in promoting steps to reduce illicit flows given their outsized impact on the poor. Eric LeCompte, Jubilee’s Executive Director, said, “The accord is an important step on a path towards ending poverty and addressing inequality.”
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Contact:
Tom Cardamone – Global Financial Integrity
+1 571.277.7310 or [email protected]
Peter Da Costa – Africa Progress Panel
+251.941.965.458 or [email protected]
Eric LeCompte – Jubilee USA
+1 253.988.4927 or [email protected]