Illicit financial flows in Asia-Pacific
[Facilitator's note: Thank you to Elodie Beth Seo, Regional Anti-Corruption Advisor, UNDP Asia-Pacific Regional Centre, for contributing this information.]
Illicit financial flows are draining significant resources from economies in Asia-Pacific.
Globally, illicit financial flows have drained about US$950 billion from the developing world in 2011 according to Global Financial Integrity [1]. The Asia-Pacific region accounts for 39.6 percent of total illicit outflows from developing countries, the largest share among regions in terms of volume.
The outflows of financial resources divert critical domestic revenues for development. This is all the more critical since these flows are often bigger than the official development assistance received by aid-dependent countries. Even in countries with fast-growing economies the outflow of financial resources threatens the sustainability of their economic and social growth. And the inflows of financial resources from activities such as corruption, organized crime, and drug smuggling can be similarly damaging by undermining governance, rule of law, and security.
Despite their financial significance, illicit financial flows have not received much attention so far in the Asia-Pacific region. This is surprising considering that other regions—Africa, for example —are putting the issue high on the political agenda. Also this issue is drawing a lot of attention at the international level with the United Nations High-Level Panel of Eminent Persons on the Post-2015 Development Agenda. The Open Working Group on Sustainable Development Goals is discussing the proposal to include a specific sub-goal on illicit financial flows as part of goal 16: “by 2030 significantly reduce illicit financial and arms flows, strengthen recovery and return of stolen assets, and combat all forms of organized crime”.
For the first time the issue of illicit financial flows was discussed in the Asia-Pacific region during a Workshop on Preventing Illicit Financial Flows hosted by the Anti-corruption Unit of the Government of Cambodia on 5 September 2014 with the support of UNDP, UNODC and the ADB-OECD Secretariat. The event gathered perspectives from senior officials of 27 countries in Asia-Pacific—including representatives from anti-corruption authorities, financial intelligence units, centers of government, ministries of finance, civil society, development partners as well as regional and international experts.
During the Workshop, a groundbreaking report, “Coming to grips with illicit financial flows in Asia-Pacific”, generated lively debates on the estimates of illicit financial flows and potential solutions to prevent them in four countries in the region: Bangladesh, Indonesia, Malaysia and Nepal. Workshop participants called for accelerating efforts in the region to prevent illicit financial flows by:
Undertaking in-country consultations to raise awareness about the importance of illicit financial flows with different stakeholders (including private sector, media and civil society), understand better their drivers and develop counter-measures accordingly.
Conducting more thorough studies of illicit financial flows in individual countries in the region.
Fostering the political consensus in the region around the need to curtail illicit financial flows by organizing a high-level regional meeting whose conclusions could feed into the UN’s Post-2015 discussions.
Engaging relevant regional and/or sub-regional bodies (e.g., ASEAN, SAARC, PIF, APEC, etc.) to ensure policy coherence and improved cooperation at the regional level.
UNDP remains committed to supporting countries in this critical area for development together with UNODC and other development partners. This is in the continuity of the global effort launched by the Administrator Helen Clark during the Fourth United Nations Conference on the Least Developed Countries in 2011 with the discussion paper on “Illicit Financial Flows from the Least Developed Countries: 1990-2008” [2].
[1] See http://www.gfintegrity.org/issue/illicit-financial-flows/.
[2] http://www.undp.org/content/undp/en/home/librarypage/poverty-reduction/trade_content/illicit_financialflowsfromtheleastdevelopedcountries1990-2008.html.
Illicit financial flows are draining significant resources from economies in Asia-Pacific.
Globally, illicit financial flows have drained about US$950 billion from the developing world in 2011 according to Global Financial Integrity [1]. The Asia-Pacific region accounts for 39.6 percent of total illicit outflows from developing countries, the largest share among regions in terms of volume.
The outflows of financial resources divert critical domestic revenues for development. This is all the more critical since these flows are often bigger than the official development assistance received by aid-dependent countries. Even in countries with fast-growing economies the outflow of financial resources threatens the sustainability of their economic and social growth. And the inflows of financial resources from activities such as corruption, organized crime, and drug smuggling can be similarly damaging by undermining governance, rule of law, and security.
Despite their financial significance, illicit financial flows have not received much attention so far in the Asia-Pacific region. This is surprising considering that other regions—Africa, for example —are putting the issue high on the political agenda. Also this issue is drawing a lot of attention at the international level with the United Nations High-Level Panel of Eminent Persons on the Post-2015 Development Agenda. The Open Working Group on Sustainable Development Goals is discussing the proposal to include a specific sub-goal on illicit financial flows as part of goal 16: “by 2030 significantly reduce illicit financial and arms flows, strengthen recovery and return of stolen assets, and combat all forms of organized crime”.
For the first time the issue of illicit financial flows was discussed in the Asia-Pacific region during a Workshop on Preventing Illicit Financial Flows hosted by the Anti-corruption Unit of the Government of Cambodia on 5 September 2014 with the support of UNDP, UNODC and the ADB-OECD Secretariat. The event gathered perspectives from senior officials of 27 countries in Asia-Pacific—including representatives from anti-corruption authorities, financial intelligence units, centers of government, ministries of finance, civil society, development partners as well as regional and international experts.
During the Workshop, a groundbreaking report, “Coming to grips with illicit financial flows in Asia-Pacific”, generated lively debates on the estimates of illicit financial flows and potential solutions to prevent them in four countries in the region: Bangladesh, Indonesia, Malaysia and Nepal. Workshop participants called for accelerating efforts in the region to prevent illicit financial flows by:
Undertaking in-country consultations to raise awareness about the importance of illicit financial flows with different stakeholders (including private sector, media and civil society), understand better their drivers and develop counter-measures accordingly.
Conducting more thorough studies of illicit financial flows in individual countries in the region.
Fostering the political consensus in the region around the need to curtail illicit financial flows by organizing a high-level regional meeting whose conclusions could feed into the UN’s Post-2015 discussions.
Engaging relevant regional and/or sub-regional bodies (e.g., ASEAN, SAARC, PIF, APEC, etc.) to ensure policy coherence and improved cooperation at the regional level.
UNDP remains committed to supporting countries in this critical area for development together with UNODC and other development partners. This is in the continuity of the global effort launched by the Administrator Helen Clark during the Fourth United Nations Conference on the Least Developed Countries in 2011 with the discussion paper on “Illicit Financial Flows from the Least Developed Countries: 1990-2008” [2].
[1] See http://www.gfintegrity.org/issue/illicit-financial-flows/.
[2] http://www.undp.org/content/undp/en/home/librarypage/poverty-reduction/trade_content/illicit_financialflowsfromtheleastdevelopedcountries1990-2008.html.