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FG tracing, tracking illicit financial flows, assets – Adeosun

Emma Ujah, Abuja Bureau Chief

As Africa loses $80bn annually through Illicit Financial Flows
The African Continent loses a whooping $80 billion, annually, to Illicit Financial Flows (IFF), the Minister of Finance, Mrs. Kemi Adeosun, has revealed.

Kemi Adeosun

The minister disclosed this at the on-going conference of the Organisation for Economic Cooperation and Development (OECD) Platform for Collaboration on Tax in New York, United States of America.

She said that Nigeria accounted for a significant percentage of the illicit financial flows out of Africa, according to a statement by his Special Adviser on Media, Mr. Yinka Akintunde, yesterday.

The minister said that the IFF was a problem that required urgent global focus and actions towards stopping it.

Mrs Adeosun was quoted as saying, “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, is taken out of the country illegally, without being taxed.”

Relying on the report of former South African President Mbeki’s High-Level Panel on IFFs, the minister said that the US$80 billion annual IFFs could make a huge development difference in Nigeria and the other country from where the funds flow.

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

In addition, she said Nigeria had signed the Multilateral Competent Authority on Common Reporting Standards, which allows for 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 was completed.

She added, “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.

“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, the custodian of Nigeria’s company registry, is pursuing relevant amendments to the Companies and Allied Matters Act to comply with global standards.”

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 strengthening of the tax system to make it more efficient.

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

She 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 tax payer base, raising revenue and regularising the tax status of many Nigerians.

She noted that the scheme was aimed at raising at least $1 billion and bringing in four million new tax payers 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.

“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,” she remarked.

The PCT Conference is a collaborative initiative of the Organisation for Economic Cooperation and Development (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.

The Head of OECD Global Forum on Exchange of Information, Ms. Monica Bhatia, stated that automatic information sharing had been adopted as part of proactive steps to curtail the IFFs from the African continent to developed countries..

“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.

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