Financial Crime World

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Illicit Financial Flows and Asset Recovery: A Global Challenge with a Focus on Armenia

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Global Context

Illicit financial flows (IFFs) are a significant challenge for economies worldwide. The United Nations has adopted various conventions and standards to combat IFFs, including the Addis Ababa Action Agenda and the Sustainable Development Goals (SDG). Similarly, the European Union (EU) and Organisation for Economic Co-operation and Development (OECD) play key roles in defining priorities to address money laundering and IFFs.

Key Statistics

  • Illicit financial flows are estimated to be greater than the entire GDP of several countries combined.
  • The global impact of IFFs is staggering, with billions of dollars lost each year through various channels.

Asset Recovery

Prioritizing the tracing, seizure, confiscation, and recovery of illicitly-obtained assets can provide developing countries with additional resources. Countries that have had success in asset recovery have adopted mechanisms such as:

  • Plea bargaining: a process where individuals agree to cooperate with authorities in exchange for reduced sentences or other benefits.
  • Reconciliation: a process where parties work together to resolve disputes and recover assets.
  • Non-conviction-based forfeiture: a process where authorities can seize and forfeit assets without the need for conviction.

Armenia Context

Armenia is a landlocked country located in the South Caucasus region, with a population of over 2.9 million people. The country has undergone a profound transformation since its independence from the Soviet Union. However, Armenia’s economy has struggled to recover from the devastating effects of the 1991-1994 war and the 2008 global financial crisis.

Illicit Financial Flows in Armenia

IFFs are a significant challenge for Armenia, with an estimated annual amount of $1.5 billion lost through various channels. Corruption, money laundering, and organized crime are major drivers of IFFs in Armenia.

Key Drivers

  • Corruption: a lack of transparency and accountability in government and business institutions.
  • Money laundering: the process of disguising the origins of illicitly-obtained assets.
  • Organized crime: groups involved in various forms of criminal activity, including extortion, kidnapping, and murder.

Conclusion

Addressing illicit financial flows and asset recovery is crucial for developing countries like Armenia. International cooperation and support are essential to help countries combat these issues and recover stolen assets. By working together, we can create a more just and equitable global economy.