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Illicit Financial Flows

Follow the money: Toolkit will guide governments to analyse illicit financial flows in the gold mining sector


23.03.2017 |

The handbook ‘Follow the Money: Financial Flows linked to Artisanal and Small-Scale Gold Mining’ was just published by the Global Initiative against Transnational Organized Crime, the GIFF Project and the GIZ sector programmes ‘Extractives and Development’ and ‘Combating Illicit Financial Flows’. In mid-March, Estelle Levin, founder of the GIFF project, introduced the handbook and discussed its results and recommendations with practitioners in the field.

Artisanal and small scale gold mining (ASGM) represents approximately 16% of gold mined worldwide. It provides livelihood to millions of people globally, and especially in the least developed countries. As a source of employment and spendable income, ASGM is positively contributing to the economy and to the development of these countries. On the downside, ASGM is exposed to the risk of criminal exploitation. There is a vast assortment of actors exploiting the ASGM sector, ranging from small-time gold buyers illegally smuggling gold across borders, to designated terrorist groups directly engaging in the mining, smuggling and laundering of gold. Illicit Financial Flows (IFFs) are the product of such illegal activities.

Fighting IFFs and formalising the ASGM sector, therefore, constitutes a priority of German development cooperation and is one of the primary objectives of the Marshall Plan for Africa designed by the German Federal Ministry for Economic Cooperation and Development (BMZ). The formalisation of the ASGM sector not only ensures better compliance with sustainability standards and reduces criminal exploitation in the gold mining sector but it also generates higher tax revenues for the countries affected by IFFs. This in turn contributes to higher investments in health, education, justice, security, and infrastructure.

The developed toolkit enables stakeholders to better understand and identify IFFs in the ASGM sector and the ways in which they impede its formalisation. The toolkit can be applied across a range of extractive industries with an artisanal and small-scale mining presence, including diamonds, coloured gemstones, and other minerals. It therefore fits very well into the general approach of German development cooperation of strengthening transparent and sustainable supply chains. The toolkit is dedicated to governments as well as development agencies, NGOs and businesses.

In ‘Follow the Money: Financial Flows linked to Artisanal and Small-Scale Gold Mining in Sierra Leone – A Case Study’ the developed toolkit was applied to the ASGM sector of Sierra Leone. The investigation revealed that Sierra Leone’s ASGM sector is generating significant economic value. However, IFFs are a bulwark against ASGM sector formalisation efforts in Sierra Leone that would fuel development, and provide economic growth. The case study ends with recommendations for future policy interventions.

The toolkit is now available in Spanish.

For further information please contact Anna Kravtsenko and Manuel Papouschek.


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