Palestine's illicit financial flows: how corruption survives crisis

Here in Palestine, civilians are bearing the brunt of repeated military escalation, mass displacement, and the destruction of essential services, as humanitarian needs reach critical levels. These realities are shaped by prolonged occupation and longstanding restrictions on movement, access to resources and economic activity, which have placed severe limits on governance and made it harder for public institutions to function and serve people effectively.

Yet as attention rightly focuses on the humanitarian tragedy unfolding, another dynamic continues in parallel – one that quietly deepens the problems we face. Illicit financial flows – money that is earned, moved or used illegally – and corruption do not pause in times of crisis. Instead, those responsible exploit instability, diverting scarce public resources and undermining the systems meant to provide public services and respond to human suffering.

Beyond Palestine, across the wider Middle East and North Africa region, countries grappling with conflict, political instability and economic pressure are also seeing their public institutions come under extraordinary strain and opportunities continue to grow for illicit wealth to be generated, concealed and moved beyond reach.

New analysis by Transparency International examines how these dynamics play out in practice across Palestine and seven other neighbouring countries – Algeria, Egypt, Jordan, Lebanon, Libya, Morocco and Tunisia. Drawing on more than 70 documented cases, it finds that corruption-linked wealth is most often generated through common abuses – for example, embezzlement, public officials demanding or taking bribes in return for contracts and the diversion of state resources for private gain, often involving millions of dollars siphoned from public funds.

These ill-gotten funds are often then hidden through a variety of common methods: moved through bank accounts, routed via front companies and proxy owners, and channelled into assets such as real estate, where large transactions and limited transparency rules make it easier to conceal who really owns what. These mechanisms are frequently combined in a complex web – layering transactions, ownership structures and types of assets to make it harder for regulators to detect and prosecute wrongdoing.

Corruption does not end when public resources are stolen. As the cases in this new analysis show, it continues when oversight and justice systems are slow to act, and when political interference protects those responsible. The damage deepens as stolen assets are hidden and moved out of reach. Where enforcement is weak, recovering those assets becomes much harder and public losses grow.

The challenge intensifies when illicit assets move across borders. Every additional layer of concealment adds time, cost and uncertainty to the process of recovery – particularly where international cooperation is slow, underused or dependent on discretionary decisions.

At the same time, common institutional barriers continue to limit effective enforcement responses across the countries reviewed. Investigations are often slowed by fragmented mandates, bottlenecks in decision-making and limited access to timely financial and other data.

In some cases, individuals who attempt to expose wrongdoing face retaliation rather than protection. Despite Palestine adopting a formal whistleblower protection law in 2019, we are concerned about how well it works in practice. There have been instances where individuals who reported suspected wrongdoing were later subjected to disciplinary action or dismissal. This highlights a gap between what the law promises and what happens in practice, undermining people’s confidence that they can come forward safely.

This lack of confidence was reflected in our public opinion poll last year that showed nearly half of respondents would not report corruption. The main reasons included a lack of adequate protection for whistleblowers and witnesses, cited by nearly a quarter of respondents, while one in ten feared retaliation and many had little confidence that reporting would lead to action.

Transparency and oversight are essential components of a healthy society. However, some measures intended to strengthen financial oversight can, if not carefully designed and applied, restrict civic space, the environment that enables people to participate in all aspects of their societies. This includes freedom of expression, association, assembly, media freedom and the right to access information.

In some contexts, rules introduced in the name of oversight have been used to place disproportionate burdens on charities, independent media, NGOs, advocacy groups and community groups, such as tighter regulation on funding sources, limiting their ability to operate effectively.

In Palestine, our organisation has faced legal action over its anti-corruption reporting, and in Tunisia, there is more pressure on civil groups. Similar trends are visible elsewhere in the region, raising concerns about the chilling effect this could have on efforts by independent organisations to hold those in power to account

Countries that curb civic space often lose control of corruption: 36 of the 50 biggest CPI decliners restricted freedoms, and over 90 per cent of journalists murdered for investigating corruption were in low-scoring countries. Effective oversight must therefore go hand in hand with protecting the space for civil society to do its work.

We are calling for stronger safeguards to stop corrupt money from flowing unchecked across the Middle East and North Africa. This includes shining a light on who really owns and controls companies by ensuring accurate, up-to-date beneficial ownership information is available to the authorities that need it and, where appropriate, to the public. It also means more independent and better-coordinated investigations, so suspicious activity can be identified and acted on early rather than slipping through the cracks. And it requires stronger international cooperation, so that when funds move across borders, they can still be traced, frozen and ultimately returned.

These are some of the key steps needed to close the gaps that allow corruption-linked money to slip through the cracks. They form part of a wider set of measures set out in the analysis, all aimed at strengthening how these flows are detected, investigated and stopped – and ultimately ensuring that public resources are protected and used for the people and services they are meant to support.