Illicit finance has come to be a significant issue not only locally, but also internationally. There are numerous delineations of illicit finance, but fundamentally it comes about from the practices, approaches and crimes targeting to transfer financial capital within and out of a nation in violation of national and global laws. Across the world, government administrations are working in tandem and joining forces to combat different illicit financial flows, which include tax evasion, global bribery and money laundering (OECD, 2014). Despite the fact that the precise scale of the problem is unidentified, illicit finance has had shattering and disparaging effects on developing nations. In the recent number of years, nations have executed and put into practice standards and abided by most recommendations provided (OECD, 2014). The fight against illicit finance is largely dependent on the quality of state regulations and whether they abide by the set global best practices. This paper purposes to delineate some of the successful and unsuccessful practices in countering illicit finance and the reasons why.
Tax Evasion
One of the key elements of illicit financial flows is tax evasion. Endeavors to increase tax collection in developing nations are emphasized on reinforcing the basic capability of their tax administrators to collect different taxes. However, this has not proved to be successful with such nations failing to live up to their tax potential (OECD, 2014). For instance, statistics indicate that nations in Sub-Sahara Africa continue to muster less than 17% of their gross domestic product (GDP), lower than the minimum level of 20% that is deemed vital by the United Nations to accomplish the Sustainable Development Goals (SDGs) (OECD, 2014). Global initiatives to restrict tax evasion and take into account the earnings of crime are being implemented for about 20 years, steered outstandingly by the OECD/Global Council on Taxation among others. Nonetheless, these determinations have not been adequate or fully successful to curtail illicit finance, thus a new and strengthened method is necessary. Curbing illicit finance will also necessitate...
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