Global Financial Integrity

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Illicit Financial Flows

Stopping Boko Haram by Curtailing Illicit Finance

Boko Haram developed from social unrest, poverty, and a strong disillusionment with the corruption of the Nigerian government. Today, the same factors make Boko Haram lethal.

Nigeria’s rampant corruption has left the nation unequipped to deal with security concerns, especially along porous borders through which Boko Haram receives immense support. A look at one of their videos reveals an immense amount of weaponry that is not only costly, but very difficult to obtain.

Boko Haram is capitalizing on the destitute and weak areas in the north of Nigeria to extract money from civilians, as well as financial opacity to receive funding from international criminal networks, and channel it towards arms acquisition from abroad: one of many examples of the inextricable link between financial concerns and national security.

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Event Recap: How Illicit Financial Flows are Europe’s Common Enemy

On Wednesday, representatives from the Senate, European Embassies of Luxembourg, the Netherlands, and anti-corruption NGOs, including GFI’s Tom Cardamone, gathered in the U.S. Senate’s Kennedy Caucus Room to discuss the growing dangers of illicit financial flows in Europe as major contributors to the European financial crisis.

U.S. Senator Jeff Sessions (R-AL) spoke about his experience with Russia’s systematic aggression in the Balkan areas, and advised they take a stronger stance against Russian encroachment. Dependence on American financial and military hegemony in the region is not a sustainable security solution, he added. Sessions, who also served as Attorney General of Alabama, urged that Central and Eastern Europe push for anti-corruption and transparency laws.

I am convinced that prosperous and open societies make the world better. The values of financial integrity are exactly what we need.

All agreed that financial integrity is the linchpin of stability and security. Hon. Becky Norton Dunlop, Vice President of the Heritage Foundation, said:

Ensuring transparency is key to dealing with corruption.

This is not just a Republican issue. This is not just a Democratic issue; this is an issue for all Americans.

The crisis in Crimea was preventable, argued Natasha Srdoc, Chairman of the Adriatic Institute for Public Policy. Regional stability is greatly undermined by Western European banks promoting fraudulent transactions in the Balkans. Had Ukraine formally broken its ties to Russia and joined the EU, it could have deterred Russia from annexing Crimea. Yet joining the EU may also have exposed the corruption schemes of Ukrainian elites, including that of former President Viktor Yanukovych and former PM Pavlo Lazarenko, whose own anonymous shell company was based in Wyoming.

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Why Indian Prime Minister Narendra Modi’s First Act Was To Go After Illicit Financial Flows

In his official first act after winning the biggest democratic election in world history, Indian Prime Minister Narendra Modi announced the formation of a Special Investigative Team (SIT) to probe illicit financial flows, or ‘black money’ as they are commonly referred to in India.

Illicit financial outflows are a massive problem for India. GFI research finds that India lost $343.9 billion to illicit outflows from 2002-2011:

 

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Russian Foreign Direct Investment and Tax Havens

It can be tough to impose economic sanctions against Russian citizens if you can’t find their money. Russia’s very complex relationship with tax havens could make this more difficult.

It is also tough to try to pinpoint exactly how much Russian money is being held in tax havens due to the fact that a lot of it isn’t reported to Russian officials/international organizations like the IMF (that’s the whole point of hiding your money in a tax haven).

The amount that is actually reported is pretty jaw-dropping. Approximately 61% of Russia’s $403 billion in outward Foreign Direct Investment (FDI) is held in tax havens:

Just to be clear, FDI is any amount of investment in a entity which gives the investor some  control over that entity’s operations. So, if a Russian billionaire incorporates an entity in Cyprus (often these entities in tax havens are just bogus “shell” entities), and invests $1,000,000 into the entity, that will show up in the FDI statistics.

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Welcome to the New GFI Website!

Welcome to the new gfintegrity.org! After seven long years, we have finally redesigned our website, with the help of some fantastic web designers and engineers. We are still working out the bugs and generating content, and would appreciate your feedback. To tell us what you think, Tweet us at @GFI_Tweets.

Our goal for gfintegrity.org is to create an engine for education and advocacy on illicit financial flows. Nearly a trillion dollars left developing countries last year illegally, resulting in tremendous amounts of economic and social damage. GFI believes that this represents the most harmful economic condition affecting the world’s poor. We hope this website helps us not only make that point, but help guide people to effective, pragmatic policy solutions to curtail illicit flows.

One way we’re doing that is using new graphs and visual aids from Datawrapper, which you will find throughout the site:

All of these graphs are interactive, and the data used to create them is embedded along with the graphics themselves.

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Africa’s Illicit Financial Flows Problem in 3 Charts

Every year, more capital is transferred out of Africa than into the continent. This is despite billions of dollars of foreign aid, natural resource exports, and foreign direct investment:

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Asymmetric Shocks And Other Woes Of The Eurozone

Massive capital flight from the weaker Eurozone economies, not envisaged before the creation of the Eurozone, are putting further pressure on the union Cross-posted from the blog of the Task Force on Financial Integrity and Economic Development. One...

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Endemic Corruption In and Illicit Flows From Russia

New Global Financial Integrity Report Reveals Russia is Losing US$50 Billion Annually in Illicit Outflows

Recent news from Russia confirms that corruption is a serious issue that, unless curbed, can prevent the country from emerging as a global economic powerhouse.  Corruption in Russia has been a hangover from the Soviet Union days. It is just that the forces of globalization have provided old hands and the up-and-coming younger generation of Russians with unprecedented opportunities to make money under the table. Of course, the exponential increase in Russia’s natural resource exports (such as petroleum products and natural gas) has not helped matters as far as overall governance is concerned. There is simply too much money in the hands of the too few.

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