ICAI information note – Mapping the UK’s approach to tackling corruption and illicit financial flows

19 Mar 2020

  • Independent aid watchdog publishes new information note.
  • Report maps out how the UK government is using aid to reduce corruption and illicit financial flows in developing countries.
  • It also proposes ‘lines of enquiry’ for potential future follow-up by ICAI, the International Development Committee (IDC) or other stakeholders.

The UK has an important role to play in international efforts to tackle corruption in developing countries – but the government’s domestic approach and the rapidly-changing nature of the threat are among six potential ‘lines of enquiry’ highlighted in a new report from the Independent Commission for Aid Impact (ICAI).

The information note – Mapping the UK’s approach to tackling corruption and illicit financial flows – was commissioned in 2019 by the House of Commons’ International Development Committee (IDC) for its inquiry into Sustainable Development Goal 16. ICAI was asked to describe the UK aid programme’s current approach, and to propose lines of enquiry for potential future follow-up by the committee, ICAI or other interested parties. As an information note, the report does not evaluate the success of specific aid programmes.

Corruption threatens the security and prosperity of both the UK and the developing world, and the government uses a mix of aid and non-aid funding to tackle it both overseas and within the UK. ICAI’s report, which looks at the period since the 2016 Anti-Corruption Summit, hosted by then-Prime Minister David Cameron, found that the UK has a long history of using aid to help individual developing countries improve their anti-corruption practices. In recent years, it has stepped up both international efforts to tackle the issue globally, and domestic initiatives to ensure the UK is not a safe haven for money stolen from the developing world.

ICAI commissioner Sir Hugh Bayley, who led the report, said: “Corruption and illicit financial flows are global problems that seriously hinder growth and development, damage the fabric of society, and deny citizens access to essential services – and tackling these issues is a complex challenge.

“This information note takes a factual look at the steps the government is taking and invites parliament to ask important questions about whether the UK’s approach is coherent, properly led, and prioritised.”

ICAI found that multiple strategies, dedicated units and legislation have been put in place to tackle both corruption and illicit financial flows – defined as money that is illegally transferred, used or earned, for example through bribery or theft – but questioned whether the wide-ranging nature of the strategies, which also cover domestic issues such as serious organised crime, terrorism and trade, could affect the priority given to reducing corruption in developing countries.

The note also recognises that the UK is well-placed to contribute to international efforts thanks to its key role in international development and London’s position as a global financial centre. However, ICAI raised questions about the government’s focus and prioritisation of the issue, and also noted that the threat is rapidly evolving into new areas, such as crypto-currencies, creating a further challenge.

Further key questions were whether the UK, which has been criticised for its role in enabling corporate tax avoidance, was acting as a “good global citizen” – and whether short-term pressures to strike trade deals could compromise the UK’s longer-term responsibilities to support stronger anti-corruption efforts. However, the report highlighted “significant efforts” by the government to manage these potential conflicts of interest, and noted work was underway to improve transparency and compliance.

ICAI also raised additional questions relating to how the government influences the wider international community, whether it has the skills and sufficient resources required to address the scale of the problem, and whether it generates and uses evidence to increase its understanding of what works to tackle corruption effectively.

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