Outflow of illicit means from developing countries

Outflow of illicit means from developing countries

According to a study by GFI Global Financial Integrity, Washington D.C. (USA) reveals that 2011 USD 946.7 billion flowed out in fraud from developing countries

Between 2002 and 2011 nearly USD 6 trillion were stolen from developing countries. The major exporters of such capital were China, Russia, Mexico and India. The region suffering most was the Sub Saharan Africa measured in terms of GDP Gross Domestic Product.

Crime, corruption and tax evasion are the sources of these big numbers. In fact the 2011 total of USD 946.7 billion (USD 832,4 billion) was up 13.7 % from 2010. GFI annually updates the report “Illicit Financial Flows from Developing Countries 2002 – 2011”.

GFOI President Raymond Baker commented the latest results: “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. Anonymous shell companies, tax haven secrecy, and trade based money laundering techniques drained nearly a trillion USD from the world’s poorest in 2011, at a time when rich and poor nations alike are struggling to spur economic growth. 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!”

The authors of the Study Dr. Dev Kar GFI Chief Economist and principle author, and Brian LeBlanc, GFI Junior Economist were tracking the amount of illegal capital flowing out of 150 developing countries over a decade (2002-11).

Table 1 shows the 25 largest exporters of illicit financial flows during this decade

Top 25 illicit capital exporters 2002 – 2011
Country Average in billion USD Cummulative in billion USD
 1. China 107.56 1008.96
 2. Russia 88.10 880.96
 3. Mexico 46.19 461.86
 4. Malaysia 37.04 370.38
 5. India 34.39 343.93
 6. Saudi Arabia 26.64 266.43
 7. Brazil 19.27 192.69
 8. Indonesia 18.18 181.83
 9. Iraq 15.76 178.79
10. Nigeria 14.23 142.27
11. Thailand 14.09 140.88
12. United Arab Emirates 11.46 114.64
13. South Africa 10.07 100.73
14. Philippines 8.89 88.87
15. Costa Rica 8.06 80.65
16. Belarus 7.51 75.09
17. Qatar 6.28 62.82
18. Poland 4.94 49.39
19. Serbia 4.94 49.37
20. Chile 4.52 45.20
21. Paraguay 4.01 40.12
22. Venezuela 3.90 38.97
23. Brunei 3.84 38.37
24. Panama 3.81 38.09
25. Turkey 3.73 37.28
Source: GFI Global Financial Integrity Dec. 2013


The top exporters of illegal capital in 2011 are shown in Table 2

Top 25 countries of 2011 origin of illicit capital export
Export Country in Billion USD
 1. Russia 191.14
  2. China 151.35
 3. India 84.93
 4. Malaysia 54.18
 5. Saudi Arabia 53.63
 6. Mexico 38.09
 7. Brazil 34.10
 8. Thailand 29.11
 9. South Africa 23.73
10. Cost Rica 21.11
11. Indonesia 19.60
12. Iraq 15.03
13. Belarus 14.09
14. Nigeria 12.89
15. Philippines 12.19
16. United Arab Emirates 11.70
17. Turkey 10.20
18. Qatar 9.31
19. Poland 9.14
20. Kazakhstan 8.22
21. Paraguay 7.10
22. Trinidad and Tobago 7.64
23. Sudan 6.83
24. Egypt 6.41
25. Syrian Arabic Republic 5.66
Source: GFI Global Fiannce Integrity



The findings of the report that Sub-Saharan Africa suffers the biggest outflows of illicit capital in relation to GDP is based on a joint study by GFI and the African Development Bank (May 2013), revealing that the continent of Africa was a net creditor to the rest of the world, after net recorded transfers of capital, such as imports, exports, FDI Foreign Direct Investment, foreign aid, etc. were adjusted for illicit financial outflows. With other words, illicit financial flows have a devastating impact on economic development and stability in Africa. Dr. Kar states: Curtailing these outflows should be paramount to policymakers in Africa, and in the West, because they drive and are, in turn, driven by a poor business climate and poor overall governance, both of which hamper economic growth.

In February 20213 GFI report by Dr. Kar and former GFI Economist Sarah Freitas estimated that the Russian economy lost at least USD 211.5 billion in illegal capital flight from 1994 to 2011.

China, the largest cumulative exporter of illegal capital flight, with outflows totalling USD 1.08 trillion over the decade, was the topic of an October 2012 country case study by the two economists.


GFI offers solutions to cure the ill.  Addressing the problems posed by anonymous shell companies, foundations, and trust by requiring confirmation of beneficial ownership i8n all banking and securities accounts, and demanding that information on the true, human owner of all corporations, trusts, and foundations be disclosed upon formation and be available to law enforcement, if not to the public. Further, reforming customs and trade protocols to detect and curtail trade of false invoicing. Requiring the country by country reporting of sales, profits and taxes paid by multinational corporations. Also requiring the automatic cross-border exchange of tax information on personal and business accounts, and harmonising predicate offenses under anti-money laundering laws across all Financial Action Task Force cooperating countries. Last, but not least, ensuring that the anti-money laundering regulations already on the books are strongly enforced.

TextileFuture would like to make clear that it does not advocate these cures proposed, because these seem too far reaching. However, after the financial crisis and the actions of the supervising bodies and politicians, it becomes evident that transparency to a certain extent should take place.  We think that the cited report is worth to be heard, because if the illicit amount of money would not occur, we feel sure that trade, and these countries’ economies punished, would flourish and they would need less efforts from the west to support them. TextileFuture is further convinced that the drain of such large amounts of money does not only hamper these countries, but also legal trade and development with traditional countries, and drains growth from them too. This is why we bring these facts to the attention of TextileFuture’s community.



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