A joint report by Global Financial Integrity and ACODE has estimated an annual loss exceeding Shs 2 trillion for the country due to Illicit Financial Flows (IFFs). Illicit Financial Flows, as defined by Global Financial Integrity, refer to the illegal movement of money or capital across international borders, involving illegally earned, acquired, transferred, or utilized funds.
The report identifies three overarching categories in which IFFs manifest: i) commercial activities involving tax evasion, trade-based money laundering, smuggling, abusive transfer pricing, and aggressive tax planning; ii) criminal activities such as poaching, illegal mineral trade, trafficking of people and drugs, arms smuggling, fraud, money laundering, stock market fraud, and forgery; and iii) corruption.
According to Mr. Robert Suuna, a research fellow, Trade-Based Money Laundering (TBML) has emerged as a prevalent method of IFFs in recent years. TBML is recognized as one of the most sophisticated money laundering techniques, closely resembling legitimate trade practices, thereby making it challenging for financial institutions and customs authorities to detect.
Mr. Suuna highlights that TBML primarily involves the provision of false information related to imports and exports, employing tactics such as over/under-billing, multiple billing, over/under shipping, and quality misrepresentation. This method poses significant challenges in terms of detection due to its intricate nature.
