A new report from the Secretariat of the African Union’s High Level Panel on Illicit Financial Flows (AU HLP-IFF) reveals that most African countries are failing to meet the legal and institutional standards required to effectively combat illicit financial flows (IFFs).
The report, released on Wednesday, August 27, 2025, also highlights that the continent lacks a coherent, coordinated strategy to address the issue.
The report, titled Successes and Challenges of Implementing the Recommendations of the African Union High Level Panel on Illicit Financial Flows, notes that global geopolitical changes over the last decade have made Africa even more vulnerable to IFFs. Major factors like the US-China rivalry, the COVID-19 pandemic, the Russia-Ukraine War, and the new geopolitics of climate change and sovereign debt have all contributed to this shift. The report explains that Africa’s high ratio of extra-regional exports leaves it particularly exposed to external economic shocks and illicit financial activities.
It also argues that the current focus on “Domestic Resource Mobilization” (DRM) is an outdated and unfair approach. The report suggests that this term distracts from the core issue of domestic resource creation. Instead, Africa needs a new policy that includes both the creation and mobilization of resources (DRCM).
While the AU HLP-IFF remains the primary body for addressing IFFs, the report found that its efforts to create a functional coordination platform have not been successful. It blames a lack of institutional commitment, an absence of a shared vision, and donor policies that interfere with African initiatives.
The report did acknowledge some progress. Many AU member states have established financial intelligence units, anti-corruption agencies, and beneficial ownership registries. However, it found that a lack of cooperation and capacity shortcomings have limited the effectiveness of these new institutions.
In other key areas, African countries have fallen short of basic standards. The report identifies several ongoing challenges that increase vulnerability to IFFs, including, undeveloped customs databases, poor regulation of non-bank financial institutions, economies heavily reliant on cash transactions, unregulated foreign exchange bureaus, lax rules for opening non-resident bank accounts, and a lack of integrated sanctions management systems and national transparency initiatives.
The report’s findings underscore the urgent need for a more comprehensive and coordinated approach to combat illicit financial flows across the continent.
ABJ/APA