Organized crime and trade in illegal markets, such as drug trafficking and the smuggling of migrants, generate billions of dollars in illicit flows every year. The proceeds of these crimes may be channelled abroad, laundered and reinvested in legal markets.
A new report from the United Nations Office on Drugs and Crime (UNODC) has gathered national estimates of crime-related illicit financial flows (IFFs). The report aims to help improve the statistical measurement of IFFs at the global level.
National data on IFFs still remain limited worldwide. However, significant progress has been made since 2017, when the UN General Assembly adopted indicator 16.4.1. ("Total value of inward and outward illicit financial flows") for the monitoring of progress towards Sustainable Development Target 16.4, which aims to significantly reduce illicit financial and arms flows by 2030. UNODC, alongside the United Nations Commission on Trade Development (UNCTAD) developed a conceptual framework for the statistical measurement of IFFs.
Since then, UNODC has supported nine countries (Afghanistan, Bangladesh, Colombia, Ecuador, Maldives, Mexico, Myanmar, Nepal and Peru) to estimate IFFs related to criminal activities. The figures provided by these estimates are staggering.
For instance, the inward IFFs acquired by selling cocaine out of Colombia were estimated between 1.2 to 8.6 billion US dollars per year from 2015-2019.
For transit countries such as Mexico, inward IFFs related to cocaine trafficking were estimated at an annual average of 4.5 billion US dollars (USD$3.2- 6.3 billion) from 2015-2018. Meanwhile - if inwards IFFs resulting from trafficking of heroin, cocaine and methamphetamine combined in Mexico are taken into account – the estimates averaged 12.1 billion US dollars (USD$8–17 billion) per year during 2015–2018. This amount is comparable to the annual total average of Mexican agricultural exports in the same period (USD$12.6 billion).
For destination and transit countries, outward IFFs largely reflect the costs of importation of the drugs, and the fact that the highest prices are paid by traffickers importing into the destination countries. For example, in Bangladesh, cross-border trafficking in heroin, methamphetamine tablets (commonly known as “yaba”), and pharmaceutical opioids such as buprenorphine and phensedyl (a cough syrup containing codeine) generated together an annual average of 481 million US dollars (USD$100-2,423 millions) in outward IFFs during 2017-2021.
“The illicit financial flows associated with some illegal markets demonstrate that illicit economies can generate export values comparable to licit sectors. Record high cocaine production and expansion to new markets will likely generate higher IFFs with higher impact on the economies of countries,” stated Angela Me, chief of the Research and Analysis Branch at UNODC.
Although current IFF estimates are limited, their significant amounts identified in the report highlight the need to expand the application of the framework for the statistical measurement of IFFs to many other countries.
“By improving statistics on crime-related IFFs, we can make sure that strategies against organized crime target the proceeds generated by illegal activities,” Ms. Me concluded.
To read the report, click here.
