African Countries Partner Global Bodies To Ends Illicit Financial Flows

The Organisation for Economic Cooperation and Development (OECD), the World Bank Group, and other global organisations have agreed on high-level collaborations with Nigeria and other African countries to stop Illicit Financial Flows (IFF) on the continent.

The Ministry of Finance, Mrs Kemi Adeosun, revealed this in a statement issued on Friday by her Special Adviser on Media and Communications, Oluyinka Akintunde.

This was a major resolution reached at the ongoing Platform for Collaboration on Tax (PCT) Conference at the United Nations in New York.

According to the minister who is also attending the conference, the Head of OECD Global Forum on Exchange of Information, Ms Monica Bhatia, gave the hint and stated that automatic information sharing had been adopted as part of proactive steps to curtail the IFFs from the African continent to developed countries.

Mrs Kemi Adeosun; Head of OECD Global Forum on Exchange of Information, Ms Monica Bhatia; and Chairman of FIRS, Mr Babatunde Fowler, during the PCT Conference on February 15 in New York.

“The Sustainable Development Goals (SDGs) specifically says that we must significantly reduce illicit financial flows by the year 2030.

“A lot of efforts are ongoing to achieve this and support developing countries to end the IFFs,” Bhatia said on Thursday in her speech at the conference.

In her address, Adeosun affirmed that the IFF was a problem that urgently requires global focus and actions towards the realisation of significant developmental progress for Nigeria and other developing countries.

She said: “The IFFs are driven by the desire to hide illicit wealth, hide the proceeds away from the public eye and law enforcement agencies, and also conceal the ways and means by which illicit wealth was created; this makes it difficult to trace the associated money flow.

“Developing countries, including Nigeria, collect significantly lower levels of tax, as a percentage of Gross Domestic Product (GDP), than wealthier states. This is partly because the income and wealth being created are taken out of the country illegally, without being taxed.”

Quoting the report of former South African President Mbeki’s High-Level Panel on IFFs, the Minister noted that Africa loses $80billion annually to IFFs, with a significant percentage of the loss coming from Nigeria.

She, however, said the Nigerian Government had engaged a leading international Asset Tracing and Investigation Agency (Kroll), to trace and track illicit flows and assets.

In addition, Adeosun hinted the conference that Nigeria had signed the Multilateral Competent Authority on Common Reporting Standards, which allows for the exchange of financial account information.

The country, according to her, is expected to effect the first exchange by 2019, as soon as the domestic legal framework is completed.

“Nigeria has adopted the Common Reporting Standards and the Addis Tax initiative aimed at improving the fairness, transparency, efficiency and effectiveness of the tax system,” said the minister.

“Furthermore, as part of open government partnership, Nigeria has included in the national action plan, a commitment to establish a public register of beneficial owners.

“To this end, the Corporate Affairs Commission (CAC), the custodian of Nigeria’s company registry, is pursuing relevant amendments to the Companies and Allied Matters Act to comply with global standards,” she added.

 

Mrs Kemi Adeosun chatting with the Chairperson of the IFF Panel of PCT, Grace Navarro, during the PCT Conference on February 15 in New York.

 

As part of measures to tackle IFFs, Adeosun called for the tightening of Nigeria’s tax codes and tax laws that encourage tax avoidance, as well as the strengthening of the tax system to make it more efficient.

She advocated more responsibility on the part of destination countries of illicit financial flows and advised that beneficial ownership registers should be established to allow authorities track money in financial investigations involving suspect accounts/assets held by corporate vehicles.

The minister further called for the elimination of safe havens that provide incentives for transfer of stolen assets and illicit financial flows abroad, and also the development of a supportive, efficient and speedy process for returning assets to originating countries.

On the Voluntary Assets and Income Declaration Scheme (VAIDS) introduced by the Federal Government in June 2017, she explained that the tax amnesty was targeted at increasing the taxpayer base, raising revenue, and regularising the tax status of many Nigerians.

Adeosun noted that the scheme was aimed at raising at least $1billion and bringing in four million new taxpayers into the tax net.

“We are using technology to improve the accuracy and efficiency of the programme. Project Light House is using advanced data mining and data analytics techniques to identify tax defaulters, establish their tax liabilities and send notifications,” she explained.

“The system-wide computer software, which drives Project Lighthouse, aggregates data from multiple sources such as bank accounts, land registry records, company registration data, tax filings, Customs’ records, asset ownership records, among others, to identify, profile and track tax evaders.”

The PCT Conference is a collaborative initiative of the OECD, World Bank Group, International Monetary Fund and United Nations.

The inaugural PCT Conference, which has as theme “Taxation and the Sustainable Development Goals (SDGs)”, is focusing on the opportunities and challenges for taxation and its role in supporting the SDGs.

It covers practical aspects of tax policy and administration, as well as encourages an open change of experience and views on how to ensure taxation policy and practices can improve SDG outcomes.

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