Transnational crime, much of which is facilitated by trade-based financial crime (TBFC), is valued at an average of US$1.6 trillion to US$2.2 trillion annually, according to a new report by Global Financial Integrity (GFI).

The Washington -based research and advisory organisation’s report, ‘Transnational Crime and the Developing World,’ found that TBFC is commonly used to legitimise proceeds from the illegal trade of drugs, art, endangered wildlife, stolen crude oil and minerals.

Attention needed

The study highlights that the combination of high profits and low risks for perpetrators of transnational crime and the support of a global shadow financial system perpetuate and drive these abuses.

It suggests that the international community has paid too little attention to combatting the money in transnational crime, instead preferring to focus on the materials or the manifestations of the crimes.

Political will

“The fight against transnational crime needs to be redirected to combatting the money the crimes generate. This means shutting down the global shadow financial system that facilitates the moving and secreting of illicitly generated funds,” GFI’s president Raymond Baker said in his comments on the report.

“None of this is technically difficult. It is a matter of political will,” he added.

Findings

The study estimates that counterfeiting is the most valuable transnational crime at US$923 billion to US$1.13 trillion on average per year, followed by drug trafficking at US$426 billion to US$652 billion.

The ranges demonstrate the serious magnitude of and threat posed by global transnational crime.

Recommendations

GFI recommends governments and regulatory bodies could increase levels of detection of TBFC by requiring corporations registering and doing business within a country to declare the names of the entity’s true, ultimate beneficial owners.

Authorities could also scrutinise import and export invoices for signs of misinvoicing, which may indicate technical or physical smuggling; use world market price databases to estimate the risk of misinvoicing, and share more information between agencies and departments on illicit markets and actors that exist within a country’s borders

The full report, ‘Transnational Crime and the Developing World’ can be found here.

Categories: Trade Based Financial crimes News