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Implications of the African Union Special Declaration on Illicit Financial Flows for financial services infrastructure in Africa
Journal of Financial Compliance,
3
(1),
76-92
(2019)
Abstract
Regardless of whether they are part of the formal system or not, all sectors that provide financial services are obliged to take preventive measures to avoid being used to conceal or promote criminality. This is the outcome of sustained pressure emanating from initiatives to curb money laundering and the financing of terrorism. In the last few years, various international bodies, such as the African Union (AU), the Organisation for Economic Cooperation and Development (OECD) and the United Nations (UN) have begun to take the need to reduce illicit financial flows seriously. This has led to statements, of which the AU Declaration on Illicit Financial Flows (2015) is among the more recent, directed at governments and financial institutions. This paper discusses the implications of the AU Declaration on policy making by AU member states and institutional reform by all sectors within the financial infrastructure in Africa. It briefly surveys the record of formal financial institutions in preventing collusion in questionable transactions that could support illicit transfers, and finds that their record is generally not impressive. More will be required, in terms of redefining relationships with core customers, conducting due diligence, determining the activities to be reported as suspicious and preventing their abuse to perpetuate illicit transfers. The paper explores the contradictions that might impede the transition required by the AU Declaration, and suggests measures that may need to be taken to enforce compliance within the formal and informal financial sectors.
Keywords: AU Declaration on illicit financial flows; financial intermediaries; corruption; approaches to curb illicit financial flows
The full article is available to subscribers to the journal.
Author's Biography
Charles Goredema has been a lawyer since 1987. He practised law both as a prosecutor and private lawyer, before taking up lecturing at three universities in southern Africa. He now consults on strategies against corruption, money laundering and cross-border illicit financial flows affecting African economies. Charles has lived and worked in Zimbabwe, South Africa, Cote d’Ivoire, Senegal, Sierra Leone and Seychelles. His consultancy work involves developing strategic plans, reviewing their implementation and advising public and private institutions. He has consulted for the African Development Bank (AfDB), the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) and the Intergovernmental Action Group against Money Laundering in West Africa (GIABA) in developing their strategies against money laundering and illicit financial flows. At the request of the Common Market for Eastern and Southern Africa (COMESA), Charles has advised on legislative reforms in Madagascar, Ethiopia and Eritrea, and drafted guidelines for Designated Non-Financial Businesses and Professions (DNFBPs) in Tanzania. He has also contributed to several typologies studies on money laundering. He regularly advises on policy innovations and legislative measures to curb money laundering and illicit financial flows. His recent work has focused on enhancing domestic public resource mobilisation in African economies, through improving capacity to tax and suppressing corruption and illicit financial flows. Charles has published many articles and a book titled, Understanding Money Laundering & Illicit Financial Flows (2015, Juta Publishers), which explore the possible options. He has also lectured to judges, investigators, prosecutors and policy makers in Kenya, Rwanda, South Africa, Uganda and Zimbabwe.
