Developing Countries and International Institutional Architecture on Financial Transparency: Global Forum on Transparency and Exchange of Information for Tax Purposes
There have been concerted global efforts to curb the generation of Illicit Financial Flows (or IFFs), but with limited success. This could be attributed to the fact that IFFs are not confined to the narrow underbelly of illegal activities; they are integrated in the mainstream global financial system. These funds flow through legal banking systems aided by an extremely efficient industry of bankers, lawyers and accountants. The transnational nature of IFFs implies that crucial information needed to determine the nature of fund flows is dispersed across jurisdictions. The inadequacy of information with domestic authorities has proved to be one of the biggest hurdles in efforts to curb IFFs. Exchange of tax information (EOI) between jurisdictions has emerged as a preferred tool to address this weakness. Though many countries have been engaging in bilateral arrangements to exchange information, the effort to create a global framework is recent.