Global Financial Integrity released the Global Illicit Financial Flows Report 2014

Dec 16, 2014 13:05 IST

The Global Financial Integrity (GFI) on 15 December 2014 released the Global Illicit Financial Flows Report 2014 titled Illicit Financial Flows from the Developing World: 2003-2012.

The report finds that the developing world lost 6.6 trillion US dollars in illicit financial flows from 2003-2012.

Highlights of the report
Illicit outflows are alarmingly increasing at an average rate of 9.4 percent per year. 991.2 billion US dollars flowed illicitly out of developing and emerging economies in 2012. The illegal capital outflows originate from crime, corruption, tax evasion and other illicit activity.

Asia continues to be the region of the developing world with the greatest volume of illicit financial flows, comprising 40.3 percent. It is followed by Developing Europe at 21.0 percent, the Western Hemisphere at 19.9 percent, MENA (the Middle East and North Africa) at 10.8 percent, and Sub-Saharan Africa at 8.0 percent.

MENA region saw the largest percent increase in illicit outflows from 2003 to 2012 at 24.2 percent per annum. Sub-Saharan Africa followed at 13.2 percent with Developing Europe at 9.8 percent, Asia at 9.5 percent, and the Western Hemisphere at 3.5 percent.

The top five exporters of illicit capital over the past ten years on average are: China, Russia, Mexico, India, and Malaysia.

Top 10 Country Rankings in terms of Largest Average Annual Illicit Outflows (2003-2012)

Rank

Country

1

China    

2

Russian Federation        

3

Mexico

4

India     

5

Malaysia             

6

Saudi Arabia

7

Brazil    

8

Indonesia           

9

Thailand              

10

Nigeria 


Recommendations on curbing the opacity in the global financial system
GFI recommended that world leaders should focus on curbing the opacity in the global financial system comprising of tax haven secrecy, anonymous companies and money laundering techniques that facilitates these outflows. Its recommendations are:

• Governments should establish public registries of meaningful beneficial ownership information on all legal entities.
• Government authorities should adopt and fully implement all of the Financial Action Task Force’s (FATF) anti-money laundering recommendations.
• Trade transactions involving tax haven jurisdictions should be treated with the highest level of scrutiny by customs, tax, and law enforcement officials.
• Governments should significantly boost their customs enforcement by equipping and training officers to better detect intentional misinvoicing of trade transactions.
• All countries should publicly disclose their revenues, profits, losses, sales, taxes paid, subsidiaries, and staff levels on a country-by-country basis as a means of detecting and deterring tax avoidance practices.

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