Pirate Trails: Tracking the Illicit Financial Flows from Pirate Activities off the Horn of Africa
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It is estimated that US$339 million to US$413 million was claimed in ransoms between April 2005 and December 2012 as a result of acts of piracy off the Horn of Africa. The effects of twenty-first century piracy off the coast of Somalia are felt far and wide by individuals and institutions in the region and beyond. Piracy hurts those forced to endure the ordeal of hijacking and has a financial impact on economies many miles from Somalia itself.
Just as few commentators have examined the true nature of the pirates, little attention has been paid to tracking and disrupting the financial flows from piracy. The focus has been on securing the ships that pass through Somali waters and where apprehended, prosecuting and incarcerating the captured pirates. The global community has made very little effort to take collective action to track, detect, disrupt and confiscate the proceeds of piracy.
Pirate Trails tracks the financial flows resulting from piracy and aims to identify what happens once a ransom payment has been made. It follows the money through a system of filters that enable the money to be reinvested in further acts of piracy as well as in other business activities–both legitimate and criminal, such as buying into the khat trade and human trafficking–and it identifies pirate financiers as the main beneficiaries of these flows. Using financial and economic data, and garnering evidence from interviews with relevant stakeholders who are or have been involved with piracy, and with other regional actors, the study attempts to assess how the proceeds are moved, invested, and used.
This study is aimed at financial sector regulators, money value transfer companies with links to the region and other relevant public and private sector stakeholders in their efforts to protect the region's financial systems against criminal abuses. Furthermore it seeks to inform the international community–including non –governmental organizations (NGOs), donors, and other international organizations involved in efforts to resolve the piracy problem within the region.
phenomena. Stuart Makanka Yikona Task Team Leader Financial Market Integrity Service Line The World Bank 1. Stuart Yikona took over the leadership of the project from Kevin Stephenson following Stephenson’s departure from the World Bank in September 2012. 2. Clément Gorrissen conducted the UNODC scoping field research in November 2011, which also fed into the information used for this joint report. Contributors Julian Casal is an operations officer in the Development Effectiveness
close analysis, as well. However, the team was not able to conduct field visits to the United Arab Emirates (UAE) in that respect, despite repeated requests to do so. Bank accounts can be used for direct transfer, or for shipping commodities. Reportedly, financiers used relatives’ names or bank accounts to transfer and launder their proceeds. As was explained during a 2011 interview conducted with the East African Seafarers’ Association Programme, For instance, a pirate makes US$100,000 and
the country’s most lucrative exports, with a majority bound for Somalia. Kimenyi mentions that the Kenya National Agency for the Campaign Against Drug Abuse estimates that Kenya exports about US$300,000 worth of khat to Somalia daily. 7. The information the team obtained from Wilson Airport officials is reinforced by Omar, Kimenyi, and Maimbo in their research and reporting on Somalia including the place of khat in the context of its economy and culture and the amount of money spent on its
Cross-Border Cash Smuggling A large part of the ransom money procured by pirates is moved in cash by air, land, or sea. Therefore, improving the capacity of countries in the Horn of Africa to adequately detect, interdict, seize, and ultimately confiscate illegal cross-border cash smuggling is paramount to any strategy aimed at tackling the issue of financial flows linked to piracy and other illicit proceeds. An example is using existing channels and opening new ones to exchange operational
including for commercial purposes, under the following conditions: Attribution—Please cite the work as follows: World Bank. 2013. Pirate Trails: Tracking the Illicit Financial Flows from Pirate Activities off the Horn of Africa. A World Bank Study. Washington, DC: World Bank. doi:10.1596/978-0-8213-9963-7. Translations—If you create a translation of this work, please add the following disclaimer along with the attribution: This translation was not created by The World Bank and should not be