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Illicit Financial Flows from Developing Countries

Measuring OECD Responses

image of Illicit Financial Flows from Developing Countries

This publication identifies the main areas of weakness and potential areas for action to combat money-laundering, tax evasion, foreign bribery, and to identify, freeze and return stolen assets. It also looks at the role of development agencies and finds that the potential returns to developing countries from using ODA on issues like combating tax evasion or asset recovery are significant.  Finally, it identifies some opportunities for a scaled-up role for development agencies.

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International bribery and illicit financial flows

An estimated USD 1 trillion is paid each year in bribes, and bribery in the developing world may amount to the equivalent of 15-30% of all official development assistance. Reducing bribery reduces the opportunities for illicit gains and hence illicit financial flows. The OECD Anti-Bribery Convention is the first and only legally binding instrument to focus on tackling the supply side: the bribe payers. Progress in implementing the convention has been mixed among OECD member countries. Monitoring of the convention is encouraging improved compliance amongst signatories through a phased system of peer reviews. Reviews highlight both examples of good practice that could be adopted by other member countries and some common concerns. All signatories to the convention should signal that the fight against bribery is a political priority and put the mechanisms in place to uncover it, including effective protection for whistleblowers. Penalties should be harsh enough to form an effective deterrent and signal to the entire business community that bribery is no longer an option.

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