By Tom Cardamone, June 4, 2015
Illicit Financial Flows Have a Devastating Impact on the Poorest Countries in the World
What do you do when “the big number,” used to estimate the global volume of illicit financial flows (IFFs), begins to lose its luster?
Over the past year or so, GFI has begun to hear—in various venues and by various people—the warning to audiences that they shouldn’t “focus on the big number.” A trillion dollars is a global number, these observers say, and can’t be used to assess the impact at the country level. Or, they contend, the trillion dollars in IFFs is from a cluster of emerging market countries and therefore is skewed to make it look as though all developing countries have huge problems when really only a few do. GFI decided to go back to the data to see if the criticisms were accurate.
As a result, this week we are publishing “Illicit Financial Flows and Development Indices: 2008–2012,” a study that looks at illicit flows from the poorest countries to determine the development impact in those places that do not appear on the top-10 list of IFF-source nations by gross volume. Rather than focus on the Chinas and Russias and Mexicos of the world, we examined IFFs in nations that appear, for example, on the Least Developed Countries list or the Highly Indebted Poor Countries list—82 countries in all were examined. What we found was simply alarming.
Illicit Financial Flows Have “Outsized Impact on Poorest Countries”
FfD Negotiators Urged to Target Illicit Financial Flows and Trade Misinvoicing
WASHINGTON, DC – Illicit financial flows (IFFs), stemming from crime, corruption, and tax evasion, have an outsized impact on the world’s poorest countries, according to a new study released today by Global Financial Integrity (GFI), a Washington, DC-based research and advisory organization. Titled “Illicit Financial Flows and Development Indices: 2008–2012,” the report also finds strong correlations between higher illicit outflows and higher levels of poverty and economic inequality.
By Tom Cardamone, April 23, 2015
A Quarterly Newsletter on the Work of Global Financial Integrity from January through mid-April 2015
Global Financial Integrity is pleased to present GFI Engages, a quarterly newsletter created to highlight events at GFI and in the world of illicit financial flows. We look forward to keeping you updated on our research, advocacy, high level engagement, and media presence.
The release of this quarter’s newsletter was delayed in order to include the high level roundtable GFI held on April 17. The following items represent just a fraction of what GFI has been up to since December, so make sure to check our website for frequent updates.
GFI’s High Level Roundtable: IFFs, FfD, and SDGs: Global Perspectives
Global Financial Integrity was pleased to host a high level roundtable on April 17 that focused on the relationship between illicit financial flows (IFFs), Financing for Development (FfD), and the Sustainable Development Goals (SDGs). Respected members of the public, private, academic, civil society, and multilateral sectors from around the world provided their perspectives on how to tackle IFFs, improve domestic resource mobilization, and strengthen the development of financial management.
By Tom Cardamone, December 24, 2014
A Quarterly Newsletter on the Work of Global Financial Integrity from October through December 2014
Global Financial Integrity is pleased to present GFI Engages, a quarterly newsletter created to highlight events at GFI and in the world of illicit financial flows. We look forward to keeping you updated on our research, advocacy, high level engagement, and media presence. The following items represent just a fraction of what GFI has been up to since September, so make sure to check our new website for frequent updates.
World Bank Forum on Illicit Financial Flows
On October 11, GFI President Raymond Baker was a featured member of a World Bank panel, titled “Illicit Financial Flows and the Post-2015 Development Agenda,” which focused on the need to curtail the negative effects of illicit financial flows on sustainable development.
Held during the IMF/World Bank Annual Meetings, the public forum was hosted by the World Bank Group’s Integrity Vice Presidency and included high-profile speakers from Bangladesh, Denmark, Norway, and the Untied States.
This December 2014 report from Global Financial Integrity, “Illicit Financial Flows from the Developing World: 2003-2012,” finds that the developing world lost US$6.6 trillion in illicit financial flows from 2003-2012, with illicit outflows alarmingly increasing at an average rate 9.4 percent per year.
Illicit Flows from Developing & Emerging Countries Growing at 9.4% per Year
US$6.6 Trillion Stolen from Developing World from 2003-2012; Trade Misinvoicing Responsible for 77.8% of Illicit Outflows
China, Russia, Mexico, India, Malaysia—in Declining Order—Are Biggest Exporters of Illicit Capital over Decade; Sub-Saharan Africa Still Suffers Biggest Illicit Outflows as % of GDP
Study Calls for UN Sustainable Development Goals to Halve Annual Trade-Related Illicit Flows by 2030; Recommends Public Registries of Beneficial Ownership; Urges Public Country-by-Country Reporting for Multinationals
WASHINGTON, DC – A record US$991.2 billion in illicit capital flowed out of developing and emerging economies in 2012—facilitating crime, corruption, and tax evasion—according to the latest study released Tuesday by Global Financial Integrity (GFI), a Washington, DC-based research and advisory organization. The study is the first GFI analysis to include estimates of illicit financial flows for 2012.
By Tom Cardamone, September 30, 2014
GFI Calls for a Sustainable Development Goal (SDG) to Halve Illicit Flows from Trade Misinvoicing by 2030
As I noted in yesterday’s post, the momentum toward global action on illicit flows by the international community (i.e. the United Nations, OECD, G20, etc) has grown substantially over the past three years. Indeed, last October, the World Bank Group noted that “there is little doubt that [illicit] flows have a pernicious impact on development” and the UN group working on development financing said that “domestic resource mobilization is being severely undermined by illicit financial flows.” And, in January, the African Union stated that “it is imperative to curtail illicit financial flows [to ensure] the efficient and effective use of resources.”
But, while there is an understanding of the problem and a willingness to act, there is no broad consensus on what should be done. The opportunity that presents itself comes from a once-in-a-generation confluence:
- the international community agreeing on the need to reduce illicit financial flows (IFFs), and
- 2) the fact that the Post-2015 development agenda is open for debate.
The political will already exists to address the IFF challenge in concrete ways. Now, the question is: what does a SMART (i.e. Specific, Measurable, Achievable, Relevant, Time-bound) SDG target on illicit flows look like?
By Grace Zhao, July 8, 2014
Kleptocrats and criminals are always looking for new ways to properly launder their illicit wealth, and it now appears that many of them are turning to Manhattan real estate.
Unsavory investors are increasingly purchasing New York City flats in an attempt to squirrel away ill-gotten funds or dodge billions of dollars in taxes, according to an in depth investigation by New York Magazine and the International Consortium of Investigative Journalists (ICIJ). Some might even say that New York City itself is becoming a sort of tax haven.
Since the financial crisis of 2008, 30 percent of all condo sales in the city were purchased through foreign entities—many of them anonymous shell companies—yet much of the purchased property remains vacant. The census bureau estimates that 30 percent of the apartments from 49th to 70th streets and between Fifth and Park Avenues in New York City are empty for up to 10 months of the year.
