Crime, corruption and tax evasion drained USD 946.7 billion from the developing world in 2011, up more than 13.7 percent from 2010, when illicit financial outflows totalled USD 832.4 billion – a dramatic increase from 2002, when illicit outflows totaled just USD 270.3 billion.

Cumulative illicit financial outflows from developing countries added up to € 5.9 trillion between 2002 and 2011.

“As the world economy sputters along in the wake of the global financial crisis, the illicit underworld is thriving… siphoning more and more money from developing countries each year,” GFI said.

Anonymous shell companies, tax haven secrecy, and trade-based money laundering techniques drained nearly a trillion dollars from the world’s poorest in 2011, at a time when rich and poor nations alike are struggling to spur economic growth.

The report said six of the top 15 exporters of illicit capital are in Asia (China, Malaysia, India, Indonesia, Thailand and the Philippines), two are in Africa (Nigeria and South Africa), four in Europe (Russia, Belarus, Poland and Serbia), two are in the Western Hemisphere (Mexico and Brazil) and one is in the MENA region (Iraq). In the last 10 years, China topped the list with USD 1.08 trillion in black money outflow, followed by Russia (USD 880.96 billion), Mexico (USD 461.86 billion) and Malaysia (USD 370.38 billion). “It’s extremely troubling to note just how fast illicit flows are growing,” said GFI Chief Economist Dev Kar.

Over the past decade, illicit outflows from developing countries increased by 10.2 per cent each year in real terms-significantly outpacing GDP growth. This underscores the urgency with which policymakers should address illicit financial flows.
“While global momentum has been building over the past year to curtail this problem, more must be done. This study should serve as a wake-up call to world leaders: the time to act is now,” GFI said.

Disputing the GFI figures, critics say the estimates of illicit outflow was overstated as the estimates in the report of trade mispricing had not been taken into consideration. The GFI estimates were essentially unrecorded financial flows, which were not necessarily synonymous with illicit financial outflows.

GFI chief economist Dev Kar said they had taken all data into consideration and made the necessary adjustments before calculating the estimated illicit outflows.
“The estimates provided by our methodology are still very conservative. They do not include trade ‘misinvoicing’ in services, same invoice trade ‘misinvoicing’, ‘hawala’ transactions or bulk cash transactions.

“This means that much of the proceeds from drug trafficking, human smuggling and other criminal activities, which are often settled in cash, are not included in these estimates.”
Press Release – Illicit Financial Flows from Developing Countries
GFI IFF Developing Countries