A/HRC/31/61 6. The final study has been further developed on the basis of the inputs of the Independent Expert to the third International Conference on Financing for Development, as well as his participation in the conference and in two consultative events. On 29 October 2015, the Independent Expert convened a panel discussion on illicit financial flows, human rights and the post-2015 development agenda, on the margins of the seventieth session of the General Assembly in New York. In New Haven, Connecticut, on 30 October 2015, the Independent Expert participated in an expert meeting to discuss the study, organized in collaboration with the Yale University Global Justice Program and the organization Global Financial Integrity. The study also benefited from a background paper that was made publicly available before the consultations and from feedback received during the abovementioned events.2 The present study expands on certain aspects of the interim study, but should be read and considered in conjunction with it. II. Tax abuse: definitions and estimates 7. Illicit financial flows can be defined narrowly or broadly. In their narrow sense, they refer to unrecorded financial flows involving funds that are illegally earned, transferred or utilized, for example, the profits of illegal activities, such as crime and corruption. Even if the funds originate from legitimate sources, however, their transfer abroad in violation of domestic laws, such as tax regulations, would render the capital illicit. Funds with a legitimate origin that are used for unlawful purposes, such as terrorist financing, would also be considered illicit. In their broader sense, illicit financial flows refer also to funds that, through legal loopholes and other artificial arrangements, circumvent the spirit of the law, including, for example, tax avoidance schemes used by transnational corporations. 8. The present study adopts the broad definition of illicit financial flows, covering both illegal tax evasion and legally questionable tax avoidance. While practices such as aggressive tax planning and harmful profit-shifting are frequently considered legal by domestic courts, as it is often difficult to provide sufficient evidence that highly complex tax optimization activities involving multiple jurisdictions violate national law, many such practices still give rise to legal concerns, rendering them a grey zone of compliance with national and international law.3 A. Tax evasion 9. As the Independent Expert discussed in his interim study, jurisdictions with high levels of financial secrecy can attract all kinds of illicit funds. Combined with low tax rates, they become ideal locations for tax-evading funds. Many important secrecy jurisdictions are home to a large private banking industry that facilitates tax evasion by high net-worth individuals in a systematic manner. Through the use of “shell” companies and other corporate vehicles, accounts can be rendered anonymous and funds can reside untaxed or minimally taxed with no means of identifying to whom they belong. It is essential to note 2 3 4 See Esther Shubert, “Illicit financial flows, tax and human rights”, background paper, 9 October 2015, available from www.ohchr.org/Documents/Issues/IEDebt/IllicitFinancialFlowsConsultation/ BackgroundPaperFinal.pdf. See, for example, David Quentin, “Risk-mining the public exchequer”, available from www.davidquentin.co.uk/Risk-Mining_The_Public_Exchequer.pdf.