AU report finds gaps in mobile money transactions open to illicit financial flows

A report by the African Union High Level Panel on Illicit Financial Flows (AU HLP) has found that mobile money transactions have gaps that can be exploited to perpetrate illicit financial flows and money laundering.

The impact of illicit financial flows (IFFs) on Africa is being felt in every sector of human and economic activity. The continent, according to the African Development Bank (AfDB), is losing as much as $580 billion every year.

The AfDB estimates that Africa loses a total of $1.6 billion daily, culminating into losses amounting to $580 billion every year, according to Dr Akinwumi Adesina, the immediate past President of the AfDB in an interview with Bloomberg news.

Dr Adesina told Bloomberg that the annual losses are undermining growth and worsening Africa’s nearly $2 trillion debt burden. He said the continent loses about $1.6 billion daily in “financial leakages,” including $90 billion in illicit financial flows, $275 billion through profit-shifting by multinationals, and $148 billion from corruption.

A recently published report by the African Union High Level Panel on Illicit Financial Flows has found that the rise of non-banks (including Microfinance Institutions, Credit Cooperatives and fintechs) which has also become a feature of the African financial sector, has vulnerabilities that can be exploited for illicit financial flows.

According to a report by the GSMA, the global organisation unifying the mobile ecosystem, mobile telecommunication in particular has deepened financial inclusion around the world as more than two billion mobile money accounts have been recorded globally as at the end of 2024 with transaction values reaching $1.6 trillion.

The report titled ‘State of the Industry Report on Mobile Money 2025’, and copied to Ghana Business News, says mobile money reached two significant milestones in 2024, surpassing two billion registered accounts and over half a billion active monthly users across the globe.

The GSMA report found that in sub-Saharan Africa alone, year-on-year, mobile money added around $190 billion to GDP in 2023, demonstrating its sustained economic influence. It further noted that sub-Saharan Africa remains the world’s most active mobile money region, driven by new registered accounts and rising monthly activity in East and West Africa.

The World Bank estimates that 30% of the adults in sub-Saharan Africa have mobile money accounts, which is significantly higher than the global average of 13%.

“There is a need to create robust regulatory regimes that evolve with the changing dynamics of the economy and the nature of the players. The increasing digitization of African economies requires equivalent attention from regulators, as it involves new frontiers for illicit financial flows.”

The AU HLP report further notes that despite the rising uptake and growth rate of non-banks, their regulation is not adequately standardised.

“This situation prevails despite the fact that most cross-border trade is now largely facilitated through electronic and mobile money transfer systems,” it says.

The report also notes that remittance from Africans living in Gulf Cooperation Countries (GCC), Europe, and North American countries is now increasingly facilitated through mobile money systems.

“However, the growing role of fintech in financial facilitation in African countries also brings vulnerabilities to illicit financial flows. Since the settlement accounts of many mobile money apps used for remittance are located abroad, there is indeed an increasing risk of the systems being used to hide and launder illicit money.” The report stated.

While acknowledging that, overall, although Africa has witnessed changes in the processes and procedures to fight illicit financial flows, significant gaps remain in establishing stringent and responsive processes at national level.

“There is a need to create robust regulatory regimes that evolve with the changing dynamics of the economy and the nature of the players. The increasing digitization of African economies requires equivalent attention from regulators, as it involves new frontiers for illicit financial flows,” it says.

By Emmanuel K Dogbevi

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