Lawpath Blog
Illicit Financial Flows: An Explainer

Illicit Financial Flows: An Explainer

Conducting business overseas? Learn all about illicit financial flows to ensure your foreign transactions are above board.

8th March 2019

In our globalised world, more and more companies are doing overseas deals. So if you are investing in a foreign country, having cross-border alliances or even importing supplies, it is crucial that your transactions are legal. Read here to learn how to start a partnership, if you are considering a cross-border partnership.

So by being informed about illicit financial flows, you can ensure that you are operating your business within the boundaries of the law. This article will explain how IFFs work.

What are Illicit Financial Flows?

Illicit Financial Flows or IFFs, refers to any transfer of finances across borders in an illegal way. Flows can be illegal because of how they are earned, transferred, or used. Thus, IFFs can have a bad effect on the economy and business as money is diverted away from legal purposes and can reduce public opinion of business.

Examples of Illicit Financial Flows

  • Deliberately invoicing incorrectly in imports to avoid custom duties and other taxes.
  • Engaging in the corruption of public officials for favourable business concessions.
  • Financing of criminal activities or organised crime

How can I prevent from being involved in Illicit Financial Flows

Since the effects of being engaged in IFFs range from fines to lengthy prison sentences, it is vital you take steps to prevent yourself from being involved in IFFs. You should look up firms you work with and record your transactions to ensure your financial flows are legal. If you are doing business across borders, why not use our free and fully customisable international services agreement.

Conclusion

Therefore by keeping informed about IFFs, you can save yourself from potential issues about your overseas transactions. Always inquire about potential business partners to ensure that your operations are above board. Moreover, a business lawyer can assist you to make overseas business arrangements.

Don’t know where to start? Contact a LawPath consultant on 1800 529 728 to learn more about establishing a partnership, customising legal documents and obtaining a fixed-fee quote from Australia’s largest legal marketplace.

Author
Lachlan Ward

Lachlan is an intern at Lawpath as part of the content team. He is currently studying a Juris Doctor at the University of Sydney. Lachlan has a keen interest in corporate law and commercial litigation.