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Global Governance to Combat Illicit Financial Flows (Council on Foreign Relations)

October 11, 2018

By Miles Kahler, Maya Forstater, Michael G. Findley, Jodi Vittori, Erica Westenberg, and Yaya J. Fanusie

From the website:


As the volume of legitimate cross-border financial transactions and investment has grown in recent decades, so too have illicit financial flows (IFFs or dirty money). IFFs derive from and sustain a variety of crimes, from drug trafficking, terrorism, and sanctions-busting to bribery, corruption, and tax evasion. These IFFs impose large, though hard to measure, costs on national and global welfare. IFFs and their predicate crimes thwart broader national and international goals by undermining rule of law, threatening financial stability, hindering economic development, and reducing international security.

The tide of dirty money has drawn attention from a growing number of actors, including national governments, international organizations, civil society organizations, and private financial enterprises, which have constructed an intricate array of national and global measures and institutions to combat IFFs. As the definition of IFFs has expanded and the policy agenda has lengthened, however, deficiencies and drawbacks in these collective efforts to curb IFFs have become apparent. Accurate measurement has not kept pace with the expanding definition of IFFs. Effectiveness of existing policies and programs to counter IFFs is uncertain. Political attention fluctuates, affecting both international and interagency coordination and national implementation. These shortcomings limit the efficacy of global efforts to combat IFFs.

Global Governance to Combat Illicit Financial Flows: Measurement, Evaluation, Innovation includes contributions from six authors, who map the contours of global governance in this issue area and consider how best to define and measure flows of dirty money. Improvements in the evaluation of existing policies as well as innovations that would increase the effectiveness of global governance are among the pressing issues covered in this collection. The authors outline an agenda for future action that will inform collective action to combat IFFs on the part of public, private, and nongovernmental actors.

Read the report here (Maya’s chapter, “Defining and Measuring Illicit Financial Flows”, can be found on page 12).