Illicit Financial Flows (IFFs) in Nigeria

The Centre for Democracy and Development (CDD) is implementing a project named: Illicit Financial Flows (IFFs) in Nigeria: The project is sponsored by Trust Africa, basically aimed to increase public debate and discussion on the phenomenon of Illicit Financial Flows (IFFs) in Nigeria also, bring to public awareness the conduit at which illicit financial flows is being perpetrated in Nigeria.

Illicit Financial Flows (IFFs) is globally defined as the unrecorded and mostly untaxed illicit leakage of capital and resources out of a country. In conceptualizing IFFs ‘illicit’ can be equated with ‘illegal’, so that IFFs are the illegal movements of cash or assets from one country to another. The World Bank used similar descriptions of IFFs in their publications. Broadly, GFI defines IFFs as funds crossing borders that are illegally earned, transferred, and/or utilized.  It is illicit, if the flow breaks a law at any point.

Simply the broader definition of IFFs encompasses tax evasion, particularly by multinational corporations (MNCs). This is because the strong corporate lobby has largely shaped the very design of tax laws around the world. Exercising their economic and political influence on countries, they can define what type of tax avoidance is considered legal or illegal in different countries according to their profit interests.

Three Main Types of IFFs:

Proceeds from corrupt dealings: For example, bribes by corporations to secure public contracts/permits or false declaration of corporate profits in order to evade tax payment, especially by extractive industries such as mining and oil exploration.

Proceeds from criminal activities: A system of bank secrecy is necessary to conceal the origins of illegally obtained money (e.g. from human trafficking or sale of illegal arms), typically by means of transfers involving foreign banks or legitimate businesses – a process known as “money laundering”.

Proceeds from commercial tax abuse: tax abuse includes both tax evasion and tax avoidance by corporations and wealthy elites by using, for example, anonymous shell companies in secrecy jurisdictions that hide who the beneficial owners really are and/or obscure information from tax authorities. Another form of commercial tax abuse is to over quote imports or under quote exports, to hide the real value of products, and therefore profits – a process known as “trade mispricing”.

The project, leverage on Vision Fm radio frequency coverage in other to disseminate issues around illicit financial flows. 

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