Source: Council on Foreign Relations

Although the role of illicit financial flows (IFFs) in hindering economic development is well understood, their implications for security—both national and global—have not received enough attention. IFFs are an important manifestation of “deviant globalization.”¹2 IFFs, for instance, help make crime pay: they aid those associated with transnational organized crime to move and spend their ill-gotten gains. They are also integral to the financing of terrorist and insurgent groups, which threaten domestic and foreign security, imperil civilians and military personnel, and endanger U.S. allies and national interests. Moreover, the ability to launder, stash, and spend funds overseas enables corruption, which can destabilize countries and regions. IFFs can also undermine security forces, rendering them less able to respond to threats of criminality and terrorism.

The U.S. government and other actors can implement policies to help mitigate IFFs and the crime, terrorism, insurgency, and corruption they facilitate. These policies will not eliminate security threats in the United States or abroad, but they can assist law enforcement and the military to meet those threats and reduce the leverage of actors that foster state fragility. IFFs should be recognized as contributing to threats to the homeland, and national security agencies should make countering IFFs—by using national and global instruments—a priority.

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This report was originally published by the Council on Foreign Relations.

Notes

[1] Nils Gilman, Jesse Goldhammer, and Steven Weber, “Deviant Globalization,” in Convergence: Illicit Networks and National Security in the Age of Globalization, eds. Michael Miklaucic and Jacqueline Brewer (Washington, DC: National Defense University Press, 2013), 5, http://ndupress.ndu.edu/Portals/68/Documents/Books/convergence.pdf. 

[2] Gilman, Goldhammer, and Weber, “Deviant Globalization.”