$88bn Yearly Loss: Experts Seek Stronger Collaboration Against Illicit Financial Flows In Africa

Experts have called for stronger collaboration among governments, regulators, financial institutions, and civil society organisations to combat illicit financial flows in Africa while also protecting the operations of legitimate non-profit organisations.

They made this call on Wednesday in Abuja at the 3rd Africa High-Level Civil Society Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) Conference, organised by Spaces for Change (S4C) West Africa and Civic Advisory Hub, in collaboration with the Special Control Unit Against Money Laundering (SCUML), an arm of the Economic and Financial Crimes Commission (EFCC).

The conference, themed “Implementing FATF Recommendation 8 Correctly: Practices, Lessons Learned and Opportunities for Reform,” brought together government officials, regulators, financial institutions, civil society groups and other stakeholders from across the region. Organisers said the event was designed to share knowledge and find practical solutions to financial crimes, while also creating an environment where civil society organisations could operate freely.

Speaking at the event, the Board chairman of Spaces for Change, Samuel Diminas, said tackling illicit financial flows in Africa was not a task governments could handle alone, and would require the collective effort of governments, regulators and civil society groups.

He said Africa loses more than $88 billion every year to illicit financial flows, adding that this deprives the continent of resources that could have gone into education, healthcare and other development needs.

Diminas explained that poorly designed and poorly implemented AML/CFT regulations had, in many cases, hurt genuine non-governmental organisations, leading to frozen bank accounts, financial exclusion and limited access to banking services.

He said the goal was to strengthen the financial system without weakening the civic space that holds the system accountable, noting that the two goals were not in conflict but could reinforce each other if compliance was handled in a collaborative rather than an adversarial manner.

He urged participants to use the conference to build trust between regulators, financial institutions and civil society, and to promote solutions that reflect Africa’s own realities.

Also speaking, the Executive Director of Spaces for Change, Victoria Ibezim-Ohaeri, said Africa continues to lose more than $89 billion annually to illicit financial flows, an amount she said was seriously affecting the continent’s economic growth and denying millions of people access to basic social services.

She said the yearly loss amounts to about 3.7 per cent of Africa’s Gross Domestic Product (GDP), stressing that the outflows continue to weaken investment in healthcare, education, infrastructure and other sectors that are important for sustainable development.

According to her, the losses are not just numbers on paper, but represent schools that were never built, hospitals left unfinished and opportunities denied to millions of people across the continent.

Ibezim-Ohaeri warned that while African governments are working to strengthen their AML/CFT frameworks, poorly implemented regulations could unintentionally harm genuine non-profit organisations by freezing their accounts, restricting their access to financial services and shrinking the space available for civil society to operate.

She said the task before stakeholders was to strengthen the financial system while also protecting the civic space that supports it, insisting that both goals could be achieved together.

She called for stronger collaboration among governments, regulators, financial institutions and civil society organisations, saying this was necessary to fight illicit financial flows while still protecting the environment in which non-profit organisations operate.

She said the conference was convened to turn lessons learned into practical solutions that would strengthen Africa’s financial integrity and build stronger institutions, commending the growing partnership between government agencies and civil society in the fight against corruption, terrorist financing and illicit financial flows.

Looking back at a decade of financial integrity reforms in Nigeria, Ibezim-Ohaeri noted progress made in areas such as stronger collaboration between regulators and civil society, reforms to the country’s anti-money laundering framework, and greater involvement of local experts in national risk assessments.

She credited the leadership of SCUML, the Nigerian Financial Intelligence Unit (NFIU) and other oversight agencies for sustaining these reforms, and said Nigeria’s experience was increasingly becoming a model for other West African countries such as Ghana, The Gambia, Togo and Burkina Faso, which are considering similar reforms.

She also commended President Bola Tinubu’s administration for showing political commitment to implementing FATF Recommendation 8, which is designed to protect non-profit organisations from being misused for terrorist financing through proportionate, risk-based measures.

The conference attracted delegates from across Africa, including government representatives, financial intelligence units, regulators, law enforcement agencies, financial institutions, development partners and civil society organisations. It also received support from international partners including the Open Society Foundations, Ford Foundation, Charles Stewart Mott Foundation and the Fund for Global Human Rights.

Speaking at the event, the Chairman of the EFCC, Olanipekun Olukoyede, represented by the Director of SCUML, Harry Erin, said the implementation of FATF Recommendation 8 should focus only on organisations that are genuinely vulnerable to terrorist financing, rather than placing blanket restrictions on the entire non-profit sector.

He said civil society organisations remain important partners in humanitarian assistance, education, healthcare, peacebuilding and sustainable development, and reaffirmed the EFCC’s commitment to strengthening Nigeria’s AML/CFT regime through closer collaboration with civil society and other stakeholders.

He described the conference theme as timely, given the growing threats posed by terrorism, organised crime and illicit financial flows across Africa.

Olukoyede explained that FATF Recommendation 8 does not seek to regulate or restrict all non-profit organisations, but rather encourages countries to identify organisations that are vulnerable to terrorist financing and apply targeted, risk-based measures, while protecting legitimate humanitarian and charitable work.

He said Nigeria’s national terrorist financing risk assessment of the non-profit sector was carried out through wide consultations involving the EFCC, NFIU, the Office of the National Security Adviser, the Corporate Affairs Commission and civil society organisations.

He said the assessment had helped Nigeria move beyond broad assumptions towards a more targeted understanding of terrorist financing risks, while ensuring that genuine non-profit organisations can continue their work without unnecessary regulatory burden.

He added that Nigeria’s reform journey shows that compliance with international standards should strengthen institutions, improve transparency and boost public confidence, rather than simply satisfy external assessment requirements.

Also speaking at the conference, the United Nations Special Rapporteur on the promotion and protection of human rights while countering terrorism, Prof. Ben Saul, said many governments had in the past misinterpreted FATF Recommendation 8 by placing unnecessary regulations on the entire non-profit sector.

He commended the 2023 revision of the recommendation for clarifying that it should apply only to non-profit organisations considered vulnerable to terrorist financing risks, stressing that FATF requires countries to adopt risk-based and proportionate measures rather than blanket regulation.

He said excessive compliance requirements, poor risk assessments, and overregulation had, in many countries, disrupted humanitarian activities, restricted civil society operations, and contributed to financial exclusion through account closures and the denial of banking services.

Saul warned against the misuse of counter-terrorism measures to suppress civil society, saying such actions undermine freedom of association and humanitarian work. He called for stronger engagement between governments and civil society in designing and implementing AML/CFT measures, saying meaningful consultation would improve compliance while protecting human rights.

He said FATF’s recently introduced “unintended consequences” procedure would provide an additional channel to address cases in which member countries misapply FATF standards.

The conference was expected to continue with technical sessions focused on strengthening AML/CFT compliance, promoting financial inclusion and advancing reforms to ensure the effective implementation of FATF Recommendation 8 across Africa.