Financial Crime World

Tunisia’s Illicit Financial Flows: A Major Threat to Economy and Security

Tunisia’s economy is facing a significant challenge in the form of illicit financial flows (IFFs), which are estimated to be worth $1.2 billion annually, representing around 3% of its gross domestic product.

The Extent of the Problem

According to estimates, Tunisia ranks first in IFFs and eighth in corruption in the Middle East and North Africa from 2008 to 2015. In 2015, illicit financial inflows made up $2.6 billion (11.4%) of Tunisian trade, while outflows constituted $1.28 billion (5.6%).

Sources of IFFs

The main source of IFFs in Tunisia is government corruption at the highest levels, with former president Zine El Abidine Ben Ali and his entourage allegedly controlling over 21% of the profits generated by the country’s private sector during his 23-year rule.

  • Ben Ali fled to Saudi Arabia in 2011 after protests ended his rule, leaving behind a legacy of corruption that continues to plague Tunisia.
  • His family was involved in various illicit activities, including the smuggling of goods between Tunisia and its neighbors Algeria and Libya.

The proceeds of crime are also a significant source of illegal income and financial outflows in the country. The smuggling of goods, including fuel, electronics, cooking oil, and textiles, generates an estimated $2.4 billion and $1.8 billion annually from Algeria and Libya respectively.

Consequences

Millions of Tunisians rely on such activities to make a living, but the corruption is deeply entrenched and affects different strata of society, compromising essential government institutions such as:

  • Judiciary
  • Legislative departments
  • Police force
  • Customs

The loss of income through IFFs has a profoundly negative impact on Tunisia’s economy, with key sectors such as:

  • Healthcare
  • Education

suffering from lack of funding.

International Responsibility

Governments and central banks from world financial centers must also share some responsibility for facilitating tax evasion and money laundering. Developed countries like Switzerland and London have historically traded on secrecy and advised corrupt leaders on investing their illegal gains.

Needed Action

To address the issue, Tunisia’s anti-money laundering agency, the CTAF, needs to:

  • Strengthen its institutions
  • Promote transparency and accountability
  • Recover public funds sent abroad through international cooperation

In conclusion, IFFs pose a major threat to Tunisia’s economy and security, and urgent action is needed to address the issue. The government must work with international partners to recover public funds sent abroad, strengthen its institutions, and promote transparency and accountability.