GFI says trade misinvoicing is primary mechanism for illicit financial flows

Trade misinvoicing is the primary measurable means for shifting funds out of developing countries illicitly, according to Global Financial Integrity’s (GFI’s) latest in a series of annual reports providing estimates of illicit financial flows (IFFs) out of the developing world.

Given the particularly high level of illicit flows due to trade misinvoicing, this report includes a special section that examines the phenomenon in the context of trade based money laundering (TBML) in drug-producing or drug-trafficking states.

Drug trade focus

Over the ten-year time period of GFI’s study, an average of 83.4 per cent of illicit financial outflows were due to the fraudulent misinvoicing of trade according to the report, Illicit Financial Flows from Developing Countries: 2004-2013.

It also says that by comparing trade misinvoicing figures to total trade in drug-producing and drug-trafficking states, there are indications that drug traffickers may be using trade misinvoicing extensively to shift ill-gotten gains.

Asia and Africa

Asia remains the region of the developing world with the most significant volume of IFFs, comprising some 38.8 percent of the developing world total over the ten years of GFI’s study.

Sub-Saharan Africa tops the list when IFFs are scaled as a percentage of gross domestic product (GDP), with illicit outflows averaging 6.1 percent of the region’s GDP.

The full report, executive summary and report data for Illicit Financial Flows from Developing Countries: 2004-2013 can be downloaded from this page, here

Categories: Trade Based Financial crimes News

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