GOVERNANCE AND ILLICIT FINANCIAL FLOWS

Melvin D. Ayogu and Folarin Gbadebo -Smith

Working Papers from African Economic Research Consortium

Abstract: Insofar that it corrodes governance, engendering opportunistic crimes, grand corruption lies at the core of the problem of illicit financial flows. We identify at least two likely antagonistic circles in the illicit flow processa-a virtuous circle and a vicious circlea-both rooted in one common factor, namely, the strategic complementarity between corruption and governance. Also, we consider the scope of global governance architecture in encouraging banks to "do the crime, pay the fine, and do no time." Given this structure, the observed, rampant impudence of banks' participation in illicit financial flows is understandable and society would not be shocked should global mega-banks increasingly resemble a police establishment run by ex-convicts. Curbing illicit flows in such a circumstance would be daunting. Therefore, civil society must live up to its civic responsibilities by displacing the vicious cycle first through creating the right incentives for politicians to identify negatively with illicit financial flows.

Date: 2014-09
Note: African Economic Research Consortium
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