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Corruption and illicit financial flows: The limits and possibilities of current approaches

This paper attempts to clarify the links between illicit financial flows and corruption, and how corruption may be tackled by stemming such flows. For this purpose, it clarifies the terminology surrounding illicit flows, describes the impact of such flows, outlines the techniques used to launder them (with a particular focus on laundering of the proceeds of corruption), and critically analyses existing policies designed to tackle illicit flows.

This paper contributes to the regulatory debate that is emerging in response to the financial crisis, as the accepted wisdom of deregulated global financial markets is being challenged. A major change in approach to tackling illicit flows is recommended. Such an approach should be more evidence-based, and consider the costs and benefits of policy choices. It should also specifically go beyond the current reliance on anti-money laundering policies and embrace more fully other policies to tackle illicit flows – including good governance reforms to tackle corruption as a source of illicit funds, but also more decisive efforts by rich countries that shelter secrecy havens or the proceeds of grand corruption.

Also available in French
20 January 2011
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Corruption and illicit financial flows: The limits and possibilities of current approaches

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Reed, Q.; Fontana, A. (2011) Corruption and illicit financial flows: The limits and possibilities of current approaches. Bergen: Chr. Michelsen Institute (U4 Issue 2011:2) 45 p.

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Quentin Reed
Alessandra Fontana

Alessandra Fontana is an independent researcher and consultant. She has provided support to developing countries in the implementation of policies and conducted applied research and policy analysis. She worked for the OECD focusing on efforts undertaken by the international community in illicit financial flows and managed projects in corruption prevention in the Middle East and North Africa. She was an adviser for U4 Anti-Corruption Resource Centre, focused on illicit financial flows and political party financing. Prior to that, she managed a large research project for Transparency International on political party financing across Latin America. In 2002, she received a Thomson Reuters Foundation scholarship for her work as a financial journalist in Brazil.

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This work is licenced under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International licence (CC BY-NC-ND 4.0)

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