Global Systems Failing: UNDP Calls for Coordinated Action to Stop Trillions in Illicit Finance

The United Nations Development Programme’s Global Policy Centre for Governance, with support from the International Institute for Sustainable Development (IISD), has produced an incisive working paper, released under UNDP’s Finance, Integrity and Governance (FIG) Initiative in 2025. It investigates why governments continue to fall short in the decades-long fight against illicit financial flows (IFFs) despite repeated global commitments. Framed around the Fourth International Conference on Financing for Development (FfD4) held in Seville, Spain, and its Sevilla Commitment, the report highlights that the main impediments are not a lack of political will but deep-seated governance, data, and coordination weaknesses. It calls for a systemic overhaul of how nations cooperate, share information, and enforce anti-corruption measures to close the multi-trillion-dollar leak draining development finance.

The Price of Illicit Finance

Each year, trillions of dollars are siphoned from legitimate economies through corruption, tax evasion, and organized crime. The study estimates global IFFs to range from USD 150 billion to 15 trillion annually, depriving developing nations of the capital needed to meet Sustainable Development Goals (SDGs). The losses contribute to an ever-widening SDG financing gap of over USD 4 trillion. Illicit funds typically move through three types of jurisdictions: source countries, where illicit funds originate; intermediary jurisdictions, which act as financial conduits; and destination countries, where these funds are finally invested in assets such as real estate or securities. Some nations, like Kenya, operate simultaneously in multiple roles, serving as both sources and destinations for illicit funds. This complexity allows criminals to engage in “forum shopping”, routing their transactions through weakly regulated territories to exploit mismatched legal frameworks. The result is a global patchwork of partial enforcement that allows illegal wealth to flow freely across borders.

Coordination Breakdown at the National Level

The first major barrier lies within national systems themselves. Combating IFFs requires cooperation among tax authorities, financial intelligence units, central banks, prosecutors, and anti-corruption commissions. Yet these agencies often operate in silos, hindered by overlapping mandates and turf battles. The report cites Nigeria, where fragmented enforcement and restrictive “need-to-know” policies severely limit the exchange of information between key anti-corruption bodies. Similarly, in the United States, banks’ misunderstanding of the Financial Crimes Enforcement Network (FinCEN) has led to weak reporting of suspicious transactions. UNDP recommends that countries conduct comprehensive national risk assessments, clarify institutional responsibilities, and establish central coordinating bodies with real authority. Examples of effective collaboration include South Africa’s Inter-Agency Working Group on Illicit Financial Flows, which unites the central bank, treasury, and anti-corruption units, and Australia’s Serious Financial Crime Taskforce, which coordinates investigations among tax, police, and regulatory agencies. These cases demonstrate that coherent national structures can significantly enhance enforcement capacity.

Global Cooperation Still a Patchwork

IFFs are transnational by nature, yet international cooperation remains inconsistent. The paper finds that institutions such as the IMF, FATF, World Bank, and OECD engage mainly through ad hoc exchanges without a unified strategy. Different risk assessment models and legal frameworks lead countries to draw divergent conclusions about which threats matter most. Mutual Legal Assistance (MLA) requests for information or asset freezing are often slow and bureaucratic, while privacy laws and technological limitations prevent real-time data sharing. The African Tax Administration Forum (ATAF) reports that only a handful of African countries meet the IT and security standards required for automatic tax information exchange under the OECD’s Common Reporting Standard. To address these gaps, the UNDP urges the creation of a formal coordination mechanism under the UN Economic and Social Council (ECOSOC) to harmonize standards, facilitate joint investigations, and promote secure, automated data sharing between countries. Without such collaboration, global efforts will remain fragmented and reactive rather than strategic.

Harnessing Technology and Data Power

The report underscores that many countries are drowning in financial data but lack the analytical tools to use it effectively. Financial intelligence units receive thousands of suspicious transaction reports daily, but have neither the systems nor the staff to analyse them promptly. To modernize enforcement, UNDP calls for common data standards, resource pooling, and the integration of AI and machine learning to detect irregular patterns in real time. Several nations are already making progress. Estonia uses AI to identify tax fraud, Peru’s Financial Intelligence Unit employs automated systems to structure and prioritize suspicious transaction reports, and India’s Aadhaar-based e-KYC system has streamlined identity verification. In Tunisia, the blockchain-powered Hannibal Platform tracks cross-border currency movements, while Brazil’s Central Bank applies machine learning to prioritize supervision of financial institutions. The report also urges governments to collaborate with civil society innovations such as OCCRP’s Aleph data platform and the Open Ownership Visualization System, which enhance transparency and investigative capacity at low cost.

Closing the Net on Hidden Wealth

Asset recovery and the regulation of professional enablers form the final frontiers in this battle. Despite efforts by the Stolen Asset Recovery (StAR) Initiative, only around USD 16.5 billion in illicit assets have been recovered globally, a fraction of total losses. Legal inconsistencies, weak beneficial ownership registries, and slow cross-border cooperation allow criminals to stay ahead. The report cites the Teodorin Obiang case, where USD 36 million in assets seized in the U.S. were repurposed for medical aid in Equatorial Guinea, and the Abacha case, which saw the U.S. and Nigeria recover over USD 330 million from laundered funds. The UNDP urges states to leverage the UNCAC and Warsaw Convention frameworks, adopt fast-response asset freezing mechanisms, and explore shared databases that link beneficial ownership to actual asset holdings. Professional service providers, lawyers, accountants, and real estate agents must also face stricter global regulation. The paper proposes a Global Asset Register, limits on the misuse of attorney-client privilege for concealment, and stronger support for journalists and civil society in investigating financial crime.

The report emphasizes that combating illicit financial flows is as much about institutional capacity and global trust as it is about political will. It calls for a united, technology-driven, and transparent financial system, one where governments cooperate seamlessly, data becomes a tool of accountability, and illicit capital no longer slips through the cracks of the global economy.