Trade-based money laundering: the case of counterfeit goods in eastern and southern Africa region

Abstract

The scope and magnitude of counterfeit and pirated goods in the Eastern and Southern Africa region is broad and significant, with its attendant negative impact on the economy, including security and health risks of the consumers. The proliferation of counterfeits translates itself into enhanced money laundering activities at the level of manufacturers, importers and wholesalers. Poverty and lack of consumer awareness of the effects of counterfeit goods are among the drivers of this trade. The dominance of cash transactions in the economies of the region facilitates easy integration of the proceeds of this crime into the rest of a country’s economy. The weak capacities of the regulatory institutions, coupled with inadequate policy, legislative and enforcement frameworks continue to fuel the prevalence of the twin crimes. These constraints should be adequately addressed if these crimes were to be tackled effectively. Indeed, tackling the problem of counterfeit goods and money laundering demands a broad menu of measures. These range from those of awareness raising and training, strengthening of legal, institutional and enforcement frameworks, improved data-base, to enhanced institutional cooperation and coordination.