Illicit economies undermine democracy and sustainable development

Global illicit economies now combine to soak up trillions of dollars in commerce across the globe. This siphoning off of vast resources from the more transparent and beneficial legal economies have enormous human, economic, societal and security costs. The consequences are the continual undermining of the rule law, while serving as primary drivers of endemic poverty, crushing corruption, instability, migrations and violence. On a global level, illicit economies enable kleptocrats to loot their countries, criminal organizations to co-opt states and export violence and terrorist groups to finance their operations.

Illicit economies are pervasive and persistent threats that undermine democracy, erode the rule of law, fuel impunity, imperil the sustainability of economic development strategies, contribute to human rights abuses and enflame conflicts. Across today's global threat environment, criminals and bad actors exploit natural disasters, human misery and market shocks for illicit enrichment. The United Nations has estimated that the illicit funds from crime, tax evasion and money laundering constitutes up to 5 percent of global gross domestic product, or $4 trillion.

As resources bleed away from benefitting the public good, "States face two fundamental and interconnected challenges: they are often unable to meet the economic needs and expectations of their citizens, and they are unable to elicit the loyalty and allegiance of significant portions of these same citizens."1 Real power now increasingly rests with a host of autonomous Transnational Criminal Organizations (TCOs), their allied political actors, and private armies with their own resource base so that re-imposing positive state control is extremely difficult. President Biden, in unveiling the U.S. Strategy on Countering Corruption, correctly noted that corruption "is a cancer within the body of societies," and is a "core national security interest" because it "threatens United States national security, economic equity, global anti-poverty and development efforts, and democracy itself.2