Trade-Related Illicit Financial Flows in Developing Europe (2013-2022)
April 9, 2026
Trade misinvoicing is a widespread form of illicit financial flow (IFF) in which traders falsify customs invoices to secretly shift value across borders. By under‑ or over‑stating prices or quantities, criminals can hide profits abroad, evade taxes and duties, or launder money under the guise of legitimate trade. The development impact is severe: the OECD observes that IFFs shrink public budgets so acutely that countries end up with “fewer hospitals and schools, fewer roads and bridges”. In other words, resources that should fund education, health and infrastructure disappear into unrecorded transactions. Trade misinvoicing, specifically, is therefore a top concern for policymakers seeking to protect revenue and governance.
This report focuses on Developing Europe, meaning Eastern European and Central Asian economies (e.g. Poland, Hungary, Romania, Türkiye, Ukraine, the Balkans and Caucasus states, and others in the IMF’s “Emerging and Developing Europe” category). These countries have seen rapid growth in trade and investment in recent decades, many via EU markets and global supply chains. However, they also face factors that heighten IFF risk: persistent governance weaknesses in some states, and complex transit trades (including to and from non-EU neighbors) that can obscure true values. For example, Eastern Europe’s energy and commodity exports often pass through multiple borders, creating opportunities for invoice manipulation. Such patterns suggest that trade misinvoicing may be as important a concern here as in other emerging regions.