Illicit Financial Flows, Theft and Gold Smuggling in Africa

Abstract

The article reviews recent research and controversies surrounding the quantification of illicit financial flows (IFF) in the gold mining sector in Africa. It is argued that the methodology and data used in the quantification of the most frequently analysed
technique, i.e., export undervaluation, is flawed not only because of the recognized weakness of the international trade data, but also because it focuses only on one aspect of IFF, and does not attempt to address issues pertaining to actual undermeasurement
or misspecification of volumes. It is argued that estimates of tax evasion activities can only be determined through forensic economic and accounting techniques, and not through macro-economic or trade data. The last section considers the increased evidence of gold smuggling to the UAE from various African countries, some of which produce no gold of any significance, but appear to export in very large volumes; and at unit import values well below world market prices.