Organized Crime, Arms Trafficking, and Illicit Financial Flows: Exploring SDG Target 16.4

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Organized crime, arms trafficking, and illicit financial flows are a chronic and ubiquitous problem among many developing countries. In 2015, the adoption of United Nations Sustainable Development Goal (SDG) Target 16.4 decisively placed organized crime and illicit financial flows on the development agenda. While the focus of SDG 16 is on peace, justice, and strong institutions, this goal has clear links to other SDGs, such as those on gender, reducing inequality, decent work, and sustainable cities. This intersection was the topic of conversation at an IPI policy forum on July 10th.

This IPI side-event to the UN High-Level Political Forum brought together experts working on the components of Target 16.4 to share their knowledge of the interplay among organized crime, illicit financial flows, arms flows, and development efforts. The event was organized in partnership with the Global Initiative against Transnational Organized Crime, and co-hosted with Small Arms Survey, the Ministry of Foreign Affairs of Mexico, and Global Financial Integrity.

Gerardo Isaac Morales Tenorio, Deputy Director General for Multidimensional Security in the Ministry of Foreign Affairs of Mexico, said that SDG Target 16.4 was relevant to his country in particular, where 20,005 murders were committed with firearms last year. He highlighted the link between weapons and ammunition as catalysts of violence and homicide rates. The target “obligates us to significantly reduce illicit financial and arms flows,” he said. He then shared three ideas that could contribute to its achievement.

The first, he said, was implementation. “It is not only needed to address arms flows but ammunitions, and it’s not only about money laundering, but we need to address all new kinds of forms of illicit financial flows,” he explained. The second consideration for achieving these goals was sharing examples of advancement from different countries to link their “concrete experiences at the local and national levels to share and maybe promote its replication,” he said. The third was acknowledging the different ways in which governments, academia, civil society, and the private sector contribute to achieving Agenda 2030.

Anna Alvazzi del Frate, Vice President of Small Arms Survey, called out the problem that despite linkages in the SDGs, “It’s not a surprise that when you go into implementation you still see the siloes approach, because this is what organizations are used to, it’s what sustainable development goals should try to change.”

She said that to measure a reduction of illicit arms flows, “You can’t count guns one by one, but you have to measure a reduction in the negative impacts—the reduction of the armed violence.” She also highlighted the inclusion of women in legal conversations on preventing violence as a key factor to look at when discussing the implementation of Target 16.4. “Working on gender in this area represents an opportunity to bring around the table those who haven’t had the opportunity to contribute to the discussion, some of the people may have been affected, to give some important meaning to a discussion that is happening around for example the arms treaty where you have a very clear formulation about preventing gender based violence amongst experts.”

Martin Borgeaud, Chief Technical Advisor for Justice, Security, and Human Rights at the UN Development Programme (UNDP) in Lebanon, spoke on reducing arms trafficking. “We need to work on both the demand and supply side: arms ammunition control but also arms violence reduction,” he said. The “best chances of success come from comprehensive public safety and community security programs that connect the local to the national.” In order to do this, he said that he saw the need to have more approaches to prevention, and that a “good entry point” to prevent violence would be engaging youth at risk.

Mr. Borgeaud also made the link between violence and gender, saying that the 2030 Agenda informed preventative approaches that are “more transformative, not only in identifying how women and men are affected differently by armed violence, but also in addressing underlying causes such as gender roles and social norms.”

He said that the SDGs are a “good framework to start collecting data and nurture and inform debate in small arms issues. We have seen a number of countries starting to collect, systematically, data on small arms and on violence the past fifteen years with interesting results… including through the establishment of national crime observatories but also in the region of the Western Balkans.” But he emphasized that the majority of countries still don’t have usable data, and “this absence of data is an obstacle to develop efficient strategies but also to encourage debates.”

Tuesday Reitano, Deputy Director of the Global Initiative Against Transnational Organized Crime, highlighted the interlinkages of organized crime, illicit financial flows, and arms trafficking. “From our perspective as analysts of organized crime and criminal economies around the world, these two things are intimately connected into an ecosystem that might have two stratas… While we have a growing economy for the one percent… the bottom fifty percent of the globe is feeling the consequences of these in levels of violence that are just unparalleled and unprecedented.”

She spoke on how large percentages of certain countries’ wealth was held offshore, that somewhere between eight and thirty percent of the global GDP “is held in secrecy jurisdictions and places where its ownership and its profits cannot be followed, traced, or understood.” This “extraordinary amount of money” has had “an extraordinary impact,” she continued, “on the kinds of economies that often are often… at the bottom of the system.”

On the topic of arms, Ms. Reitano highlighted that the “legacy” of arms is “very long,” in that “arms stay, they’re not easily destroyed, they circulate out of the hands of legitimate conflict actors, they circulate out of the hands of state institutions and policing and into the hands of criminal groups and gangs into violent conflict actors, terrorist groups and those with other agendas, and they stay for a very long time.”

The current global consensus is that the money needed to achieve all SDGs is estimated at 1.4 trillion dollars a year, added Tom Cardamone, President of Global Financial Integrity. Reducing illicit financial flows is “critically important not only in and of itself,” he continued, “but because if it is addressed by governments, it will enable them to achieve the other targets and other goals because of the money it generates. There’s a huge amount of money that is siphoned out of developing economies each year because of illicit flows.” So, he asked, “how do you get from where they are now to 1.4 trillion a year? Well, you have to claw back the money that has been lost to illicit flows.”

Illicit flows are a “massive,” ongoing issue faced worldwide, he said, costing about a trillion dollars a year. “There is nothing in the data that we’ve seen over the last ten years or so that gives us any indication they are being curtailed.” And since there is “no emerging country that doesn’t have a problem with illicit financial flows, it is something that should be of paramount importance to governments going forward,” he asserted. But progress is lacking, he said. “Four years into the SDG period we’re not seeing many countries really attacking this problem as we think they should. There are many tools, mechanisms, policies, rules, regulations, laws that could be used to get really on top of this, we’re not seeing too many countries doing that, they’re a bit behind schedule.”

The good news, Mr. Cardamone added, is that many things have been done to help governments obtain information related to illicit flows. However, this has not reached the level of complete transparency because countries are only required to report to their home tax authority. “All these areas are, I think, reason for optimism going forward, with the understanding that we are four years into this process,” he said. “Governments really have to begin to step up their efforts to address this critically important problem.”

Adam Lupel, IPI Vice President, moderated.