Drivers of Illicit Financial Flows

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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.



Conclusions and recommendations

Since the concept of illicit financial flows comprises a broad range of activities, the task of analysing them in a single study is challenging. In addition, existing research in this field suffers from significant data limitations, due to the illegal and/or illicit nature of the phenomenon under observation. This report has explored a novel method of studying IFFs and demonstrated how fuzzy-set Qualitative Comparative Analysis can potentially help us analyse the complexity of IFFs, despite the limited data available.


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