Conference On Improving Domestic Resource Mobilization (DRM) and Stemming Illicit Financial Flows (IFFs) 12th-15th March 2019, Nairobi Kenya Presented by Justine Bagyenda ; on 14th March 2019

Discussion Points: Illicit Financial Flows (IFFs) - Why Definitions Matter Dangers of IFFs National Risk Assessments (NRA) National Co-operation International Co-operation Role of Churches in Stemming IFFs

Illicit Financial Flows -Why Definitions Matter SOURCE: Pinning Down Illicit Financial Flows: Why Definitions Matter Center for Global Development Figure 1. Core concept of illicit financial flows. https://www.cgdev.org/blog/pinning-down-illicit-financial-flows-why-definitions-matter

Dangers of IFFS IFFs can; Drain foreign exchange Reserves Lower tax receipts and reduce government revenues Cut the capital available for private investment Encourage criminal activity undermining the rule of law and political stability of a country

National Risk Assessments(NRA) IFFs are difficult to measure given their illegality and the type of activities that underlie them. However, NRA would enhance a country’s collective understanding of the risks because it: Focuses on all offences that generate illegal proceeds, including corruption, tax evasion, organized crime, environmental crime and helps countries understand the extent of their exposure to many of the activities that give rise to IFFs Provides the application of appropriate control measures to mitigate the risks Therefore formal co-operation of Domestic regulators through MOUs is key. The World Bank has developed an advisory package to guide countries in conducting their NRA

National Co-operation Domestic Regulators /Law Enforcement Agencies Financial Intelligence Units Revenue Collection Authorities Anti- Corruption Courts Criminal Intelligence Units Public Prosecution Courts Internal and External Intelligence Units Financial Sector Regulators ( central bank, capital markets authority)

International Co-operation The Financial Action Task Force (FATF) which sets the standards for international action against money laundering and terrorist financing Global Forum on Transparency and Exchange of Information for Tax Purposes which works to establish clear standards for sharing of tax related information Extractive Industry Transparency Initiative (EITI) which promotes open and accountable management of natural resources and the work of the World bank in many related areas Regional groupings ( EAC, SADAC, ECOWAS etc) Financial Regulators (Auditors, Accountants, Securities Exchanges) Cross Boarder Monitoring and Supervision of financial transfers. Both formal and informal information sharing is key in stemming IFFs

Role of the Churches in Stemming IFFs Know your Customers (register for all parishioners) Financial Literacy Programs Financial Integrity (governance and corruption) Churches must make sure that their tax and trade practices, if any, comply with local laws. Establish ethics and compliance programs for parishioners Play a role as advocates to increase transparency around revenues and expenditure (the power of the pulpit)

References The IMF and the Fight Against Illicit Financial Flows: https://www.imf.org/en/About/Factsheets/Sheets/2018/10/07/imf-and-the-fight-against-illicit-financial-flows Illicit Financial Flows (IFFs) : http://www.worldbank.org/en/topic/financialsector/brief/illicit-financial-flows-iffs Illicit Financial Flows : https://www.gfintegrity.org/issue/illicit-financial-flows/ Combating illicit financial flows worldwide: https://www.giz.de/en/worldwide/39748.html

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