Tax Justice Network unveils online tool for tracking illicit financial flows




The Tax Justice Network (TJN) has launching the Illicit Financial Flows Vulnerability Tracker to help countries identify the trading partners and channels that pose the greatest risks to their economies. Illicit Financial Flows (or IFFs) are illegal movements of money or capital from one country to another.

An illicit financial flow happens when funds are illegally earned, transferred, and (or utilized) across an international border. They harm economies, societies, public finances and governance of countries around the globe and pose various challenges, one being difficulty faced by countries when they attempt to identify which financial flows carry the largest risk to their economies.

The new Illicit Financial Flows Vulnerability Tracker allows users to explore illicit financial flows data with interactive tools, and understand which countries are more vulnerable to illicit financial flows and the reasons behind the situation. It also helps the user to identify which partner countries and which channels are responsible for the vulnerability in a country’s economy.

The Vulnerability Tracker also compares countries’ vulnerability levels and identifies the trading partners that generate the greatest illicit financial flows for each country.

By helping users to better understand illicit financial flows vulnerability, the tracker is intended to assist policy makers, journalists, academics and civil society to curb and prevent illicit financial flows. The Tracker measures and visualizes the most important economic channels used for illicit financial flows, allowing journalists, academics and policy makers to understand and prevent illegal financial flows.

The Tracker has various interactive tools including Map which shows the global picture of vulnerabilities to illicit financial flows; Country Profiles for each country that provides the opportunities for illicit financial flows; and Comparison Tool which compares how different countries are vulnerable to specific channels.

In a previous research, TJN identified the 8 main channels in which illicit financial flows take place these being via  trade (exports and imports), banking positions (claims and liabilities), foreign direct investment (outward and inward) and portfolio investment (outward and inward).

For each of the 8 channels through which illicit financial flows operate, TJN then calculated three measures.

  1. Vulnerability: Capture how financially secretive the country’s trade, investment or banking partners are. Vulnerability reports the average financial secrecy level of all partners with which the country trades or invests for a given channel, weighted by the volume of trade or investment each partner is responsible for.
  2. Intensity: Reports on the share of national GDP that the channel makes up, helping capture the importance of the channel to the country. Intensity does not measure the secrecy involved in the channel nor the risks of illicit finanical flows the channel poses.
  3. Exposure: Combines a channel’s vulnerability and intensity to estimate the share of a country’s GDP exposed to illicit financial flows by the channel. Comparing the exposure levels of different channels helps countries identify the channels that most expose their economies to illicit financial flows.

The development of the Illicit Financial Flows Vulnerability Tracker was been funded by GIZ (German Corporation for International Cooperation). The tracker has been developed by Thibi.

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