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Alex Cobham, Javier Garcia-Bernardo, Moran Harari, Alice Lépissier, Shanna Lima, Markus Meinzer, Lidana Montoya Fernández, Luis Moreno ■ Vulnerability and exposure to illicit financial flows risk in Latin America

Tax justice reports
Tax justice reports

Vulnerability and exposure to illicit financial flows risk in Latin America

An assessment of risks of illicit financial flows in Latin American at a regional and national level. Vulnerability to illicit financial flows is analysed by various economic channels, in turn highlighting the jurisdictions supplying most risks.

Illicit financial flows (IFF) affect the economies, societies, public finances and governance of Latin American countries – as they do with all other countries. Latin American and Caribbean countries account for a significant share of trade-based illicit financial flows and are estimated to lose annually US$43bn to global cross-border tax abuse. In this paper, we present the resulting risk profiles for individual Latin American countries that allow granular comparison of vulnerability to illicit financial flows across countries and by channel, in turn highlighting those jurisdictions supplying most risks. The bespoke national risk profiles provide clear signposts to guide individual countries’ audit and monitoring activity, international tax and transparency policies, and negotiation priorities. They can also assist regional and international organisations in directing their interventions and support for curbing the risks identified in this paper.


Key findings

  • Latin America imports most of its risks to illicit financial flows from outside the continent
  • Vulnerability to illicit financial flows in trade predominantly stems from North America and Asia, whereas vulnerability in banking and investment channels (both portfolio and direct investment) predominantly stems North America and Europe.
  • More than 90 per cent of vulnerability in the investment channels originates from OECD member states and their dependencies.
  • Sustained vulnerability in banking liabilities is caused by the Cayman Islands and the Bahamas.

Key recommendations

  • Enhance data availability
  • Consider Latin American coordination on countering illicit financial flows risks
  • Embed illicit financial flows risk analyses across administrative departments

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