Follow the money to root out threat of financial crimes

Financial crime is one of the greatest threats to the economic and social well-being of people living in all countries. Tax evasion, corruption and money laundering cost developing countries alone well over $1 trillion every year.  The proceeds from activities associated with financial crimes are estimated to account for some 3.6 percent of global GDP. The time is ripe for a discussion on what to do about this problem — and a perfect opportunity lies in the Obama administration’s work with African leaders.

Since 2000, Africa’s GDP has grown annually by more than 5 percent on average. In spite of headwinds from the global economy, growth remained strong in 2013. The 2014 outlook remains positive, in part, because Africa’s recent economic dynamism has been underpinned by some sound macroeconomic policies and stronger partnerships with major emerging markets.


Despite this very real progress, problems remain. Four out of five people in sub-Saharan Africa still live in poverty. Approximately 40 million young people are jobless, and wealth disparities in Africa are among the widest in the world. Sub-Saharan Africa accounts for one-third of the world’s undernourished population.

Financial corruption schemes often contribute to and exacerbate these and other problems, from governmental instability to terrorism in Africa and other countries around the world.

A key step to addressing such issues, and moving toward sustainable and inclusive economic growth, would be to strengthen the capacity of criminal tax investigators to tackle financial corruption.

Tax officials routinely examine the financial affairs, transactions and records of millions of individuals, companies and other taxpayers.  This places them in a strong position to be the first government authority to identify possible indicators of tax crime and serious nontax financial crime, such as corruption.

A first and crucial step to combat serious tax and other related financial crimes is developing a detailed understanding of key areas of risk and trends in tax crime activity that countries are likely to face, as well as the sharing of information of successful methods used to counter them. It also requires access to state of the art training and information on the latest trends and investigative techniques.

To date, officials from Cameroon, Ghana, Kenya, Nigeria, Uganda and other African nations have participated in Organization for Economic Cooperation and Development (OECD) capacity-building courses for tax crime investigators, and demand continues to grow in their desire to address the issues surrounding tax and other financial crimes.

The losses from these crimes are robbing these countries in their efforts to fight poverty, provide free education and improve the health of their citizens. These countries recognize that investing in “the next generation” also includes investing in good governance and providing the means for their institutions to tackle tax and other financial crimes.

Kenya, as an example, has a keen interest in tackling these crimes to move forward with plans for an agreement with the City of London to establish Nairobi as a major international financial hub. To ensure success, Kenya is dealing with these issues together with the OECD through initiatives, such as an International Academy for Tax Crime Investigation, to focus on capacity building for criminal tax investigators.

A second program offers a regional approach to the capacity needs of Kenya and other African nations in combating these crimes. This includes training investigators from several of the countries in the region to allow them to learn from one another, build regional networks and take ownership of their training needs.

The OECD is also spearheading work to assist African countries through the Tax Inspectors without Borders program, which uses a real-time, learning-by-doing approach to provide a senior investigator from a donor country to work with the managers and investigators in a designated African nation over an extended period of time following initial capacity building training both via in-country training and at the Tax Academy.

Discussion and debate over tax policy has often centered around the politics of whether taxes should be lowered, raised or even flattened. Helping countries from sub-Saharan Africa to Ukraine to the Middle East combat tax and other financial crimes can get at much more fundamental concerns, and can contribute to economic growth and greater security for all the nations of the world.

Danvers is deputy secretary-general of the OECD. He served in the Obama administration as deputy chief of staff for the secretary of State; was staff director of the Senate Foreign Relations Committee; and served in the Clinton administration as senior director at the National Security Council and special assistant for National Security Affairs.