Illicit financial flows (IFFs) in Nigeria, driven by corruption, tax evasion, money laundering, and illegal trade, have become a significant challenge. With estimates suggesting losses of $1 trillion or more over 50 years, addressing IFFs is crucial for sustainable development. The deployment of technology, including information and communications technology (ICT), is seen as a potential solution. Speakers at the Realnews 11th anniversary lecture discussed the threats posed by IFFs, emphasizing the need for a systemic solution. The use of digital technologies, blockchain, artificial intelligence, and data analytics is highlighted as essential in combating financial crimes associated with IFFs.
- Magnitude of Illicit Financial Flows:
- IFFs from Africa, including Nigeria, are estimated to have exceeded $1 trillion over the past 50 years, significantly impacting sustainable development.
- Sources of IFFs:
- IFFs typically originate from corruption, criminal activities (trafficking, arms smuggling, fraud), and commercial activities (tax evasion, customs duty evasion).
- Threats of IFFs:
- IFFs pose threats to sustainable development, undermining the rule of law, democratic institutions, and social trust. They also impact domestic revenue collection and hinder optimal benefits from extractive sectors.
- Role of Technology in Combating IFFs:
- ICT systems are crucial for preventing, investigating, and mitigating the risks associated with IFFs. Technologies such as blockchain, artificial intelligence, machine learning, and data analytics are deployed to combat financial crimes.
- Technological Solutions:
- Technologies like Palantir’s data analytics platform and Chainalysis’ blockchain analysis tools are employed by law enforcement agencies to analyze massive volumes of data and trace illicit blockchain activity.
- Challenges and Concerns:
- Potential concerns related to the use of ICT in combating financial crime include cybersecurity threats, false positives, algorithmic bias, human capacity issues, regulatory compliance, technological obsolescence, and funding challenges.
- Continued Investment and Collaboration:
- Continued investment in ICT solutions, collaboration among stakeholders, and a multidisciplinary approach are essential in addressing emerging criminal methods. Public education on Internet safety is crucial to limit risks associated with the spread of criminality through technology.
The deployment of technology, including advanced analytics, artificial intelligence, and blockchain, is considered crucial in combating illicit financial flows in Nigeria. Addressing the challenges associated with financial crimes requires a collaborative, multidisciplinary approach and ongoing investment in technology solutions. Public education on Internet safety is also emphasized as an important component of efforts to limit risks associated with criminal activities facilitated by technology.