Transparency International’s analysis uncovers policy loopholes and regulatory blind spots that have allowed professionals operating in the non-financial sector to provide high-risk services and enable illicit financial flows out of Africa.
For too long, professionals and businesses operating in the non-financial sector have escaped both public and regulatory scrutiny. Corrupt officials from around the world have taken advantage of this, employing lawyers, company formation agents, real estate agents and notaries at various stages of the process of hiding, laundering and investing of their illicit gains. Lack of scrutiny has also meant that policy-makers have largely been unaware of the specific risks posed by these professionals and businesses.
Transparency International has undertaken an extensive review of available evidence to better examine the role of such intermediaries in facilitating illicit financial flows out of Africa. We collected and analysed 78 cases covering 33 African countries. These are cases which implicate politically exposed persons (PEPs) from across the continent in siphoning off proceeds of corruption abroad or parking their wealth offshore. Our analysis identifies specific enabling behaviours and high-risk services. It also reveals policy loopholes and regulatory blind spots that require decision-makers’ attention.
In the reviewed cases, we were able to identify 87 professionals and businesses who fall under seven categories: accountants and audit firms (4), business consultancies (3), law firms or individual lawyers (42), notaries (4), real estate agencies (7), tax advisory businesses (1), and trust and corporate service providers, or TCSPs (26). All these have likely facilitated corruption and the hiding of wealth abroad – either through direct criminal involvement, negligence or failure to address risks related to their clients. In this report, Transparency International refers to them as “enablers” of illicit financial flows.
The seven types of enablers captured in our database performed 15 distinct services for their clients. These are services that are of critical importance to the corrupt as they help them remain anonymous, conceal the illicit origin of funds and circumvent enforcement measures. Services related to the creation or incorporation and management of companies and trusts appeared most frequently in our database, with lawyers and TCSPs providing the majority of these services. In general, lawyers provided the most diverse array of services, followed by TCSPs. Notaries and real estate agents mainly dealt with real estate purchases.
These 87 enablers are registered or incorporated in 30 different jurisdictions. By analysing the data on enablers and mapping the relationships between the jurisdictions where they were registered, where their clients were based and where they were providing their services, we observe three main patterns.
