Zambia loses $3 billion a year in illicit financial flows

ZAMBIA is losing up to $3 billion a year through tax avoidance and tax evasion by multinational companies, Patriotic Front (PF) deputy chairperson for publicity Emmanuel Mwamba has disclosed.

Mr Mwamba says overly generous tax incentives provided to mining and other multinational companies by the Zambian government were contributing to Zambia’s loss revenue.

Mr Mwamba said most of these factors had been established by international studies and for the first time, the Financial Intelligence Centre (FIC) had done a consolidated study on Illicit Financial Flows (IFFs).

He said Illicit financial flows were a serious draw back on domestic resource mobilization efforts of developing countries and international trade had been abused for purposes of illicit financial flows by criminals.

“In particular, use of international trade to launder proceeds of crime and move value from one country to another has been identified as a prevalent form of illicit financial flows,” Mr Mwamba said.

Mr Mwamba said this form of illicit financial flows was referred to as Trade Based Money Laundering ( TBML).

He said the Financial Action Task Force defined TBML as “the process of disguising the proceeds of crime and moving value through the use of trade transactions in an attempt to legitimize their illegal origins or finance their activities.

Mr Mwamba said TBML was an alternative remittance system that allowed Transnational Criminal Organizations ( TCOs) the opportunity to earn, move and store proceeds disguised as legitimate trade.

He said the purpose of the study was to identify the TBML risk indicators and provide a basis for authorities to formulate strategies to combat TBML in Zambia.