Illicit financial flows have emerged as the biggest economic impediment and the world must tackle the growing problem to secure sustainable development, the President of The Global Financial Integrity (GFI) Raymond Baker has said.
According to Baker, illicit outflows from developing countries that are estimated to be in the region of a staggering $950 billion annually are wrecking havoc in the economies of these countries.
Analysis at GFI, a Washington DC-based research and advocacy organization, show that illicit outflows are draining hard currencies from developing countries, instigating rise in inflation, reducing tax collection, curtailing investment and undermining free trade.
More critically, the runaway problem undercuts the foundations of societies, limits poverty alleviation efforts and complicates security concerns.
“This is why it is so important that curbing illicit flows becomes a priority within the sustainable development goals (SDG) agenda because it gets at the heart of the systemic causes of poverty and inequality for billions of people around the globe,” noted Baker.
He was speaking during the ‘Illicit Financial Flows on the Post-2015 Development Agenda’ panel discussion during the 2014 IMF/World Bank Annual Meetings.
The discussion was organized by the World Bank Integrity Vice Presidency and it addressed the issue of illicit financial flows in the context of the Post-2015 Sustainable Development Agenda.
According to Baker, the most common way to move illicit money is the misinvoicing of trade, the most commonly used means of draining illicit money out of Africa.
In effect, the world must set very specific SDG targets to address the reality of illicit financial flows and cut illicit financial flows stemming from trade misinvoicing by 50 per cent in 15 years.
GFI is focused on analyzing illicit financial flows and promoting transparency in the international financial system as a means to global development and security.