The issue of Illicit Financial Flows (IFFS) is at the forefront of the international agenda. Governments worldwide are joining forces to combat money laundering, tax evasion and international bribery, which make up the bulk of IFFs. Although the exact scale of the problem is unknown, IFFs have devastating effects on developing countries. Instead of attempting to quantify precisely what is by definition a hidden activity, now is the time to determine where public funds should best be targeted to make the most impact.
This report measures how well countries are performing in their fight against IFFs. It draws on public data describing the situation in these policy areas and the role of donor agencies. The report is a key output of the OECD Strategy on Development, which was launched in 2012, and provides a unique comparison of country performance on some of these global standards. In recent years, countries have implemented standards and complied with most recommendations of the Financial Action Task Force. 1,300 tax information exchange agreements have been signed and hundreds of offenders for foreign bribery have been sanctioned. In addition, almost USD 150 million in proceeds of corruption, according to the report, were returned between 2010 and June 2012.
This publication identifies the main areas of weakness and potential areas for action to combat money-laundering, tax evasion, foreign bribery, and to identify, freeze and return stolen assets. It also looks at the role of development agencies and finds that the potential returns to developing countries from using ODA on issues like combating tax evasion or asset recovery are significant. Finally, it identifies some opportunities for a scaled-up role for development agencies.