Devi Pilay, GI ACE Researcher, summarises the findings of ‘Fighting illicit financial flows: key learnings from GI ACE research’, a synthesis document she authored that presents insights from our programme’s research into IFFs.
The past few decades have seen growing international efforts to detect and combat illicit financial flows (IFFs). This is a key priority in the UK government’s Anti-Corruption Strategy released in late 2025, and the UK will host a major international summit to tackle ‘dirty money’ this June. Despite the increasing scope and complexity of this regulatory agenda, however, there has been limited evidence on the effectiveness of these reforms, leading to challenges in evaluating and strengthening existing policy. Building a strong evidence base is crucial, especially during this window of opportunity.
A new GI ACE report brings together findings from a wide range of GI ACE research programmes studying IFFs. This briefing is based on GI ACE publications from the last six years, including research reports, journal articles, books, and policy briefs. Four key themes emerge from this body of research, which are dealt with in detail in the report:
- Patchy effectiveness of the current global Anti-Money Laundering (AML) regime
- Centrality of professional enablers
- Rapid adaptation to new laws and enforcement
- Key areas for strengthening policy and regulatory responses
This blog summarises key findings for each theme.
1. Patchy effectiveness of the current global AML regime
- New research by Haberly et. al demonstrates how the structure of global illicit financial networks has evolved in conjunction with the changing global regulatory landscape over the past few decades, illustrating how illicit flows have adapted to anti-IFF policy developments, and revealing persistent weaknesses in the global AML frameworks.
- The centre of gravity of sanctioned financial networks is shifting from Western to non-Western financial centres with strong institutions and ties to the West – most notably from London to Dubai and Hong Kong. Corruption-linked networks continue to exploit financial centres of Western countries and the offshore jurisdictions under their control – most significantly the UK and its overseas territories, especially the British Virgin Islands. Among banking secrecy centres, the United States is now the dominant global hub for corruption-related banking, replacing Switzerland.
- There has been international regulatory convergence across offshore jurisdictions and OECD countries in AML compliance. However, there remains a gap between jurisdictions in some critical areas of financial secrecy, notably a) statutory banking secrecy, and b) the scope and accessibility of beneficial ownership data. This may encourage new strategies of regulatory arbitrage by actors seeking secrecy.
- While offshore jurisdictions still have regulatory gaps, the most consequential deficiencies in AML and financial transparency are now in the United States and China. Weak standards in the world’s two largest economies undermine the legitimacy and effectiveness of the global IFF regulatory framework.
2. Centrality of professional enablers
- Effective action against IFFs must include addressing the role of professional intermediaries that obscure, launder, and protect illicit funds. These intermediaries include financial professionals like bankers, as well as non-financial professionals, such as lawyers, accountants, real estate agents, and other service providers. While many countries have made strides in establishing AML policies, there is little evidence that these measures have meaningfully curbed the role of enablers in IFFs. Significant data gaps have made it difficult to evaluate the effectiveness of specific policy responses.
- Heathershaw et. al’s research investigates how global networks of enablers facilitate money laundering and reputation laundering, revealing the mechanisms used by kleptocrats to conceal illicit wealth. The UK has become a key centre of professional services for kleptocrats, enabling transnational kleptocracy while undermining the integrity of important UK institutions and weakening the rule of law. Current regulatory frameworks have not been robust enough to address the risks posed by kleptocratic networks.
- A number of GI ACE research projects have investigated specific professions and their roles in facilitating IFFs. Taylor and Beizsley and Prelec et. al analyse the legal profession in the UK, and its role in facilitating corruption and IFFs. Dell’Osso et. al examine capture of the banking sector in the DRC, enabled by weak oversight and complicity from both domestic regulators and international financial partners. Angélico et. al investigate real estate sector dynamics and regulatory frameworks in the Global South, which are not adequately accounted for by the international AML regime.
3. Rapid adaptation to new laws and enforcement
- As AML regulatory regimes across the world are converging and tightening, corrupt actors are finding new ways to evade scrutiny and facilitate IFFs. A displacement effect identified by Haberly et. al finds that sanctioned financial networks have moved from Western financial centres to major non-Western centres with strong institutions and ties to the West – most notably from London to Dubai and Hong Kong – as these networks adapt in response to global regulatory convergence.
- Sanctions evasion and illicit trade have also become significant risk areas of IFFs: sanctions imposed by the West, while intended to cut supplies to Russia, have instead empowered trade networks and intermediaries with neighbouring states, reinforcing geopolitical faultlines opened by Russia after the invasion of Ukraine. Vladimirov and Kostova’s investigation into IFFs in the Western Balkans and the Black Sea region demonstrates a surge of imports of dual-use goods from the EU and their re-export to Russia through established networks, smuggling routes, and mis-invoicing techniques. These countries play an important role in enabling EU dual-use goods flows to Russia, underscoring their functions as key re-export hubs that facilitate evasion and/or avoidance of sanctions. The research demonstrates how highly-motivated international actors can rapidly find and exploit loopholes in the current global AML and sanctions frameworks.
4. Key areas for strengthening policy and regulatory responses
- Haberly et. al demonstrate the need for a broader public financial transparency-oriented approach to global IFF-regulatory reform, which recognises the key role played by non-governmental actors, alongside governments, in policing financial crime, and is led by example by the world’s wealthiest and most powerful countries. Two specific reforms are urgently needed: publicly available beneficial ownership registers and the removal of restrictive banking secrecy measures.
- Nizzero et. al argue that the current asset recovery regime is ill-equipped to deal with the realities of modern kleptocracy, which operates as a ‘kleptocratic enterprise’. A more effective approach to combat transnational kleptocracy would involve targeting organisational structures (the enterprise) rather than individuals acts.
- Heathershaw and Mayne recommend several policy and implementation changes in order to more effectively tackle the UK’s role in facilitating transnational kleptocracy. Taylor and Beizsley identify key reforms to improve the AML supervisory regime for the legal sector. Dell’Osso et al.’s research supports proposals for reforming the banking sector in the DRC, and for improving oversight and accountability by international governments and organisations.
- Heathershaw and Mayne’s analysis of Unexplained Wealth Orders (UWOs) in the UK identified key weaknesses in the legislation and implementation of UWOs.
- Harvey et. al’s research into Nigeria’s Beneficial Ownership Transparency regime and asset recovery regime identified key gaps in implementation and enforcement, offering lessons for other developing countries working to close regulatory loopholes and strengthen enforcement of international anti-corruption frameworks.