Mapping the Networks that Facilitate Corruption Flows

Estimating the global volume of illicit financial flows stemming from tax evasion, money laundering, terrorist financing, financial fraud, and corruption is an inexact science. The UN once estimated that 2-5% of global GDP, or $800 billion - $2 trillion is laundered annually; in 2018, the IMF offered a range of $1.6-4 trillion; in January 2024, Nasdaq gave an estimate of $3.1 trillion. There are experts hard at work on this question, critically mapping how exactly the funds move, and through which channels, countries and banks.  

One such expert is Daniel Haberly, an Associate Professor in Human Geography at the School of Global Studies at the University of Sussex and affiliated with the university’s Centre for the Study of Corruption (CSC). With a background in economic geography, his study of the world’s financial architecture led to an interest in gaps in financial regulation, offshore banking, and then money laundering, financial crime and corruption. In this two-part series, I cover our recent conversation about some of the key anti-corruption dimensions of Haberly’s work.

In his 2025 paper From London to Dubai-Kong: Mapping Geographic Shifts in US Sanctioned Global Financial Networks, 1980-2024, Haberly details how geopolitics and sanctions, notably against Russia and Iran, has not decreased illicit financial flows, but has moved the nexus of that activity. After the 2006 UN Security Council and subsequent US secondary sanctions, Iran pivoted away from Europe – in particular, London – as its main international business hub outside the Middle East, towards Hong Kong, while also remaining rooted in Dubai, long one of Iran’s main regional centers. Russia followed suit after sanctions stemming from the 2014 invasion and annexation of Crimea. At the same time, as Haberly wrote in his 2024 paper A New World Map of 30 Years of Financial Secrecy and Anti-Money Laundering Reforms, covering the AML and financial secrecy landscape detailed in the Regulation of Illicit Financial Flows (RIFF) dataset, funds from corruption not linked to geopolitical factors have “shown no apparent tendency to abandon Western financial centers.”

Haberly told me that his next project is to build on his 2024 paper on foreign direct investment (FDI). Haberly described FDI as a “black box,” with “two-thirds going in and out of offshore destinations with no apparent connection to its country of origin.” Haberly thinks there is a “massive amount of round tripping, in both developed and developing countries,” and that the “US might be the second largest foreign investor in itself.” Inside that black box, he thinks, is likely large amounts of tax avoidance and other forms of arbitrage, but to understand whether that can be separated from corrupt or other criminal flows, he says, “You really have to go through it company by company.”

To that end, Haberly told me, the most important tool for countering illicit flows, including those connected to corruption, is beneficial ownership transparency (BOT). He says that the UK’s registry illustrates the importance of public BOT, calling it “the most open, easy to use, and Google-integrated.” He notes, “The openness of data at least partially compensates for poor government verification of data,” allowing civil society organizations, journalists, and bloggers to identify suspicious financial flows. 

From that point of view, I asked Haberly his view of weakened BOT transparency in the US. He says that those recent changes will “reinforce the tendency for the US to be one of the most opaque remaining secrecy jurisdictions.” Haberly told me that in terms of setting up companies to shelter money acquired through corrupt means, inasmuch as that money is not tied to geopolitical rivals or subject to sanctions, the US is one of the world's leading jurisdictions, pointing to states such as Delaware, Florida, South Dakota, Wyoming and Nevada. He called the US the “last remaining developed country without a beneficial ownership framework.” 

Those challenges for the US go broader still. In From Secrecy to Scrutiny: A New Map of Illicit Global Financial Networks and Regulation, written with Georgia Garrod and Robert Barrington, Haberly notes that the US “has also refused to adopt the Common Reporting Standard, a global framework for exchanging financial account information between countries to combat tax evasion that has been adopted by all other major developed economies. That paper also covers a dataset on the impact of the FCPA on the movement of illicit funds and reveals that corruption-linked banking seems to be moving from Switzerland to the US. How recent changes in FCPA enforcement might impact that apparent trend remains to be seen.

Marc Schleifer

Governance, Democracy and Economic Development Expert