Strategies for preventing illicit financial flows in developing countries
| Date | 01 May 2020 |
| Published date | 01 May 2020 |
| Pages | 601-608 |
| DOI | https://doi.org/10.1108/JMLC-02-2020-0017 |
| Author | Bello Umar,Martins Mustapha Abu,Zayyanu Mohammed |
| Subject Matter | Accounting & Finance,Financial risk/company failure,Financial compliance/regulation,Financial crime |
Strategies for preventing
illicit financial flows in
developing countries
Bello Umar,Martins Mustapha Abu and Zayyanu Mohammed
Department of Business Administration, Nile University of Nigeria,
Abuja, Nigeria
Abstract
Purpose –This paper aims to critically reviewthe strategies for prevention of illicit financial flows to and
from developing countries with a view of ascertaining the most effective strategies to be selected and
implementedby developing countries to stem the scourge.
Design/methodology/approach –The peer-reviewedjournal articles were studied; those that discussed
illicit financial flows were selected and reviewed critically using the systematic quantitative assessment
techniquestogether with an output table.
Findings –The critical review deduced that enacting effective trade laws, trade regulations, creating a
beneficial ownership registry, multinational companies disclosing information on business, automatic
exchange of information on tax issues, the Financial Action Task Force 40 guidelines on anti-money
laundering and countering financing of terrorism and domestic and international cooperation are the most
reliablestrategies that should be implemented by developingcountries.
Research limitations/implications –The wide geographic scopeof developing countries, use of only
high-quality databases that restricted the use of other articles and use of public sector perspective are the
limitationsfor this paper.
Originality/value –This study is amongst the limited works to discuss the most reliable and effective
strategiesto prevent illicit financial flows in developing countries.
Keywords Sustainable development, Developing countries, SDGs, Effective strategies,
Illicit financial flows, Illicit flows
Paper type Literature review
1. Introduction
Illicit financial flows from developing countries are estimated to have reached US$1.1tn
annually (Hoinaru, 2017;Ortegaet al., 2017;Forstater, 2018;Miyandazi and Ronceray, 2018;
Guzikova and Lukevich, 2018); corruption and criminal activities only account for 35% of
illicit flows, whereas commercial transactions by multinational companies make up the
balance of 65% of illicit flows globally (Ortega et al.,2017;Guzikova and Lukevich, 2018;
Gathii, 2019). In line with this trend, the Global Financial Integrity (GFI) reported the
continuous movement of illicit flows to and from 148 developing and emerging market
nations globally was because of the involvement of these nations in different trades with
developed economies (GFI, 2017;Guzikova and Lukevich, 2018;GFI, 2019). So, what are
these illicit flows?
Illicit flows are a form of illegal financial transaction or capital flight because of the
criminal/commercial activities or illegally earned and transferred money for the purpose of
benefiting from the illegal proceeds (Ortega et al., 2017;Moorman, 2018;GFI, 2019;Gathii,
2019). The money does not return to the countries of origin; hence, depleting the resources
Illicit financial
flows in
developing
countries
601
Journalof Money Laundering
Control
Vol.23 No. 3, 2020
pp. 601-608
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-02-2020-0017
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