Calls for departure from conventional definitions of IFFs

A new report is calling for a departure from conventional legal definitions of illicit financial flows (IFFs). 

Trapped in Illicit Finance: How abusive tax and trade practices harm human rights, argues that definitions of IFFs should go beyond only flows of money that can categorically be declared illegal.

Funding gap

Developing nations lose US$416 billion a year in public revenue according to the report by the charity Christian Aid, India’s Centre for Budget and Governance Accountability and Brazil-based Fundación SES.

The report proposes that some of the funding gap estimated at US$2.5 trillion for delivering the seventeen sustainable development goals could be closed by clamping down on what the authors describe as “the abusive, unethical, immoral IFFs that rob the poor to enrich the wealthy.”

New definition

The report calls for a departure from conventional legal definitions of IFFs that only capture flows of money widely accepted as being illegal.

Rather, the authors believe what matters is not whether flows of money or tax practices are legal, but whether they are abusive, harmful or limit governments’ ability to deliver on their human rights obligations.

They want the definition of IFFs broadened to refer to “cross-border flows of money that are either illegal or abusive of laws in their origin, or during their movement or use.”

New rules

The report calls on the UN to establish structures to define IFFs based on this rights-based definition.

This would require the UN to play a more prominent role in setting the rules and conventions for taxing transnational companies, and to expedite international tax cooperation by establishing a UN tax body to decide on taxation rules.

Trapped in Illicit Finance: How abusive tax and trade practices harm human rights, can be found here.



Categories: Trade Based Financial crimes News

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