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A Conceptual Framework to Analyse Illicit Financial Flows (IFFs)

Author

Listed:
  • Ndiimafhi Norah Netshisaulu

    (Graduate School of Business Leadership, University of South Africa, Pretoria 0002, South Africa)

  • Huibrecht Margaretha Van der Poll

    (Graduate School of Business Leadership, University of South Africa, Pretoria 0002, South Africa)

  • John Andrew Van der Poll

    (Graduate School of Business Leadership, University of South Africa, Pretoria 0002, South Africa)

Abstract

This article develops a conceptual framework, based on a comprehensive literature review, to address illicit financial flows (IFFs), characterised by the illegal move of monies or capital across country borders. IFFs compromise transparency through complex transactions and incur harmful effects for both developing and developed economies. Financial opacity creates a conducive environment for IFFs to flourish, as a challenge to good financial practices. Following an interpretive philosophy, an inductive research approach, qualitative methodological choice, cross-sectional time horizon all through data collection through review of scholarly literature, and framework were developed to analyse the said IFFs. Our framework encourages good corporate governance and provides insights, as well as the identification of possible characteristics of IFFs perpetuated in the financial statements of entities, which would discourage entities to engage in IFFs. Specifically, practitioners should be able to identify characteristics of IFFs and use the framework to address these. Within the finance dimension, it is important to study the specific mechanisms regarding how IFFs may damage an entity’s reputation, as well as their going concern. In future work, we shall enhance the framework through interviews with auditors, followed by a validation of the enhanced framework through a focus group. The utility of the final framework can be tested through case studies in the industry to analyse IFFs.

Suggested Citation

  • Ndiimafhi Norah Netshisaulu & Huibrecht Margaretha Van der Poll & John Andrew Van der Poll, 2022. "A Conceptual Framework to Analyse Illicit Financial Flows (IFFs)," Risks, MDPI, vol. 10(9), pages 1-20, September.
    • Handle: RePEc:gam:jrisks:v:10:y:2022:i:9:p:172-:d:903506
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    References listed on IDEAS

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