A/HRC/36/52 term that has no single, universally accepted definition. The United Nations has, thus far, not expressly defined the term. 6. The emergent consensus, however, is that “illicit” means much more than simply “illegal”. Accordingly, definitions such as those offered by Global Financial Integrity, a research and advocacy organization working to curb such flows, which conflate the term “illicit” and “illegal” and thus limit the meaning to the “illegal movements of money or capital from one country to another” 2 are now generally disfavoured, including by the International Monetary Fund (IMF), 3 the Organization for Economic Cooperation and Development (OECD)-Group of 20 (G-20)4 and the Tax Justice Network.5 Other abusive practices, such as forms of tax avoidance and transfer mispricing, are now seen as also being within the ambit of illicit financial flows. Even more strikingly, the United Nations Conference on Trade and Development (UNCTAD) has adopted a broader definition of illicit financial flows that includes activities “contravening the law or its spirit”.6 What is more, the Economic Commission for Africa (ECA) has defined illicit financial flows to include “commercial tax evasion, trade misinvoicing and abusive transfer pricing; criminal activities, including the drug trade, human trafficking, illegal arms dealing, and smuggling of contraband; and bribery and theft by corrupt government officials”.7 7. Based on the foregoing, any useful definition of illicit financial flows would necessitate a broader, two-tiered interpretation of the word “illicit”. In the first interpretation, “illicit” would refer to funds which are illegally earned, transferred or utilized and include all unrecorded private financial outflows that drive the accumulation of foreign assets by residents in breach of relevant national or international legal frameworks. More specifically: funds relating to the proceeds of crime — for example, funds acquired through corruption; criminal activities; abuse of powers including theft of State assets/funds; market abuse; tax abuse; and regulatory abuse would be included. 8. In its second sense, “illicit” would refer to funds from legitimate economic activity that become illicit due to their being handled or dealt with subsequently in contravention or circumvention of the law (see A/HRC/22/42 and Corr.1, para. 5). This includes all arrangements designed to circumvent the law or its spirit such as tax evasion, forms of tax avoidance and forms of tax optimization schemes, as well as profit shifting by multinational corporations, trade misinvoicing and transfer mispricing. This definition is consistent with the one employed in the final study. 9. Finally, and perhaps more importantly, this definition, with its inclusion of tax avoidance, is in consonance with current politico-economic exigencies. Two recent “political” events seem to indicate the increasing centrality of tax avoidance to a working definition of illicit financial flows. The first is the political fallout from the Panama Papers and the second is the creation of the Platform for Collaboration on Tax, a joint initiative of IMF, OECD, the United Nations and the World Bank. Thus, tax avoidance has clearly evolved into a significant political issue distinct from its twin (i.e., tax evasion) and any 2 3 4 5 6 7 4 See www.gfintegrity.org/issue/illicit-financial-flows/. Rabah Arezki, Gregoire Rota-Graziosi and Lemma W. Senbet, “Capital flight risk”, Finance and Development, vol. 50, No. 3 (September 2013). Available at www.imf.org/external/pubs/ft/ fandd/2013/09/arezki.htm. See www.oecd.org/tax/beps/beps-about.htm and www.oecd.org/tax/closing-tax-gaps-oecd-launchesaction-plan-on-base-erosion-and-profit-shifting.htm. See www.taxjustice.net/topics/inequality-democracy/capital-flight-illicit-flows/. United Nations Conference on Trade and Development (UNCTAD), Trade and Development Report, 2014 (United Nations publication, Sales No. E.14.II.D.4), p. 173. Available at http://unctad.org/en/PublicationsLibrary/tdr2014_en.pdf. Economic Commission for Africa (ECA), Illicit Financial Flows: Report of the High Level Panel on Illicit Financial Flows from Africa (2016), p. 9. Available at www.uneca.org/sites/default/files/PublicationFiles/iff_main_report_26feb_en.pdf. ECA was mandated to establish the High Level Panel by the Joint African Union Commission on Human and Peoples’ Rights-Economic Commission for Africa Conference of African Ministers of Finance, Planning and Economic Development at its fourth meeting, held in 2011. The Chair of the Panel was the former President of South Africa, Thabo Mbeki.