Description

Developing countries lose considerable wealth to illicit financial flows (IFFs) each year. Recent work by UNCTAD shows that the African continent lost USD 88.6 billion, equivalent to 3.7% of its GDP, in annual capital flight (2013-2015). Almost half of this was due to IFFs related to the export of extractive commodities. IFF risks are particularly high in the oil commodity trading sector due to its complexity, opaqueness and the staggering amounts of funds involved. These risks are likely to increase in the context of COVID-19, as deals are being expedited often on highly uncompetitive terms, large amounts of money are being distributed and moved, while oversight and audit functions are overstretched. Drawing on current work at the OECD, this panel session seeks to shed light on the complex world of oil and gas commodity trading, to unpack the particular IFF risks generated in the oil-trading sector. The session will also explore the opportunities and challenges – including through official development assistance support - of curbing IFFs in oil commodity trading to enhance domestic resource mobilisation in oil-producing countries.