Economic Governance Report I: Institutional Architecture to Address Illicit Financial Flows

Abstract

This premier Economic Governance Report (EGR I) assesses the institutional architecture pledged by African governments for blocking illicit financial flows (IFFs) and recommends initiatives to strengthen it. The report’s findings indicate that IFFs continue to thrive, though African countries have tried to establish dedicated institutional frameworks for combatting them. The IFFs include corruption, money laundering, trade mis-invoicing to move money illicitly, and tax fraud (including corporate tax dodging). The report encourages more inter-agency collaboration, coordinated reporting, the removal of duplicated and competing mandates, and consistent political support for institutional reforms to combat IFFs. The report suggested that the African countries that are parties to international conventions on corruption should fully implement and align all national laws governing anti-corruption agencies. Anti-corruption laws should expressly cover IFFs. African countries should also strengthen the powers and independence of anti-corruption agencies to effectively address corruption, money laundering, trade-related IFFs, and tax-motivated IFFs. They should integrate data systems across all economic channels—central banks, customs authorities, other tax authorities, registries of companies, security exchange commissions, and commercial and non-banking financial institutions—to support tracking of corrupt transactions and the movement of corrupt proceeds.