Drivers of Illicit Financial Flows

image of Drivers of Illicit Financial Flows

This study offers a comparative analysis of 42 countries, examining common trends among causes leading to illicit cross-border money transfers. Its findings support existing theoretical frameworks on the key drivers of illicit financial flows. Our analysis has identified that most countries that experience large transfers to offshore bank accounts are characterized by weak regulatory systems: i.e., shortcomings in the institutional capacities to detect, monitor and prosecute illicit financial flows are the primary drivers behind tax evasion. The growing availability of macroeconomic and governance data on developing countries provides avenues for more detailed research on illicit financial flows in the future. As alternative methodologies for measuring these flows become more sophisticated, there is both a pressing need and a huge potential for the advancement of a research agenda focusing on illicit cross-border money flows.



Research method

This section outlines the process through which the research project on the drivers of IFFs was developed, including the data used and some of the methodological choices involved. Most studies of IFFs are quantitative in nature, at the expense of accuracy and the detailed analysis of specific contexts. Recently, scholars have been stressing the importance of qualitative data and country-level analyses for the IFFs research agenda. To the best of our knowledge, this study is one of the first attempts to apply QCA to the subject of illicit financial flows. By using a research method rarely applied to this field, this study contributes to current efforts to shed light on the elusive phenomenon of trans-border financial crossings. While it does not pretend to be comprehensive, the study aims to demonstrate the usefulness of this approach when studying IFFs.


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