An estimated US$1.6 trillion in potential trade misinvoicing among 134 developing countries has been identified in 2018 according to a new report published by Global Financial Integrity (GFI).
Trade-related Illicit Financial Flows in 134 Developing Countries 2009-2018 says that of that US$1.6 million, US$835 billion occurred between the developing countries and 36 advanced economies.
To identify potential trade misinvoicing, GFI examined official UN trade data to identify value gaps, or mismatches, in the data regarding what any two countries reported about their trade with one another.
Developing countries with the largest value gaps identified in trade with 36 advanced economies in 2018 are China (US$305 billion), Poland (US$62.3 billion), India (US$38.9 billion), Russia (US$32.6 billion) and Malaysia (US$30.7 billion) according to the report.
It says the developing countries with the largest value gaps identified in trade with 36 advanced economies as a percentage of total trade are Gambia (45 per cent), Malawi (36.6 per cent), Suriname (31.9 per cent), Kyrgyzstan (30.6 per cent) and Belize (29.2 per cent).
National and international recommendations
At the national level, the report recommends countries should make trade misinvoicing illegal; strengthen law enforcement capacities of customs authorities, and establish multi-agency teams to address customs fraud, tax evasion and other financial crimes.
Countries should also implement readily available trade misinvoicing risk assessment tools; strengthen customs oversight of free trade zones, and establish national trade facilitation committees.
At an international level, countries should work together to expand information-sharing between importing and exporting countries, and explore the use of distributed ledger technology to identify trade misinvoicing the report concludes.
GFI’s report, Trade-related Illicit Financial Flows in 134 Developing Countries 2009-2018, can be found here.
Categories: Trade Based Financial crimes News