Curbing Illicit Financial Flows from Developing to Developed Nations: A Call for Global Accountability and Legal Reform

This study critically examines the structural and institutional systems that perpetuate illicit financial flows (IFFs) from developing to developed nations, framing the issue as a modern continuation of historical resource extraction. Employing a qualitative, descriptive research design, the analysis was conducted using secondary data from international organizations, global financial watchdogs, and academic literature. The data were systematically analyzed using NVivo 12 software, applying a thematic analysis framework. Parent nodes were developed to capture major themes, including the historical and structural roots of IFFs, their forms and mechanisms, the enabling role of developed nations and financial secrecy jurisdictions, and the resultant impacts on fiscal capacity, governance, conflict, and forced migration. Child nodes facilitated granular coding of sub themes such as trade misinvoicing, tax havens, revenue loss, and youth unemployment. The findings reveal that IFFs driven by corruption, trade misinvoicing, and tax evasion are fundamentally enabled by financial secrecy, weak regulatory enforcement, and professional intermediaries in developed countries. This systematic capital flight severely erodes the tax base and institutional capacity of developing nations, exacerbating poverty, undermining public services, and fueling conditions conducive to conflict and forced migration, with significant spillover effects for developed destination countries. The study concludes that existing global accountability mechanisms remain inadequate due to voluntary compliance and a lack of binding enforcement. It therefore issues a call for transformative global accountability and legal reform, proposing the establishment of a binding UN treaty and an independent international enforcement body with prosecutorial powers to mandate transparency, ensure asset repatriation, and break the cycle of illicit extraction that impedes sustainable development in the Global South.