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Good Financial Governance and Extractives

Illicit Financial Flows


Follow the Money: Financial Flows linked to Artisanal and Small-Scale Gold Mining is a handbook published by the Global Initiative against Transnational Organized Crime, the GIFF Project, the GIZ project Combating Illicit Financial Flows, and the Extractives and Development sector programme. Around 16% of all gold mined worldwide comes from small-scale mining. This therefore provides a livelihood for millions of people, particularly in the world’s least developed countries. By creating jobs and a source of income for governments, the sector plays an important role in the development of these countries. At the same time, there is a very high risk of criminal exploitation by various stakeholders – from gold buyers who smuggle small amounts of gold across borders illegally, to terrorist groups who are directly involved in the mining and smuggling of gold and in hiding the origins thereof. Illicit financial flows are the result of such activities.

Combating illicit financial flows and formalising small-scale gold mining are therefore important issues for German development cooperation and an objective of the Marshall Plan with Africa adopted by the German Federal Ministry for Economic Cooperation and Development (BMZ). Formalising small-scale gold mining would not only lead to better compliance with sustainability standards and reduce criminal exploitation, but would also increase tax revenue in the respective countries. This, in turn, would facilitate higher investments in health, education, justice, security and infrastructure.

The toolkit enables relevant stakeholders to identify illicit financial flows in small-scale gold mining and to understand how they undermine the formalisation of the sector. It can be applied to various natural resources for which small-scale mining plays a role, including diamonds and precious stones. The toolkit is designed for use by governments, development agencies, NGOs and the private sector alike. The publication Follow the Money: Financial Flows linked to Artisanal and Small-Scale Gold Mining in Sierra Leone – A Case Study applies the toolkit to small-scale gold mining in Sierra Leone, where gold mining makes a substantial contribution to the economy. The study demonstrates that the formalisation of the sector and thus its value in development terms is being seriously undermined by illicit financial flows. The case study concludes by recommending options for future policy measures.

For further information, please contact Anna Kravtsenko or Manuel Papouschek

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