#illicitfinancialflows

It really doesn't get any better than this.

ONE criticism made of the Occupy Wall Street movement, a gathering of anti-bank protestors now three weeks old, is that it has not made its grievances clear. Something the great unwashed might chant more about is the damage done by offshore finance. Global Financial Integrity, a civil-society group, calculates that more than $1 trillion a year flows illicitly out of developing countries, far more than flows the other way in aid. Much of this departing money goes to tax havens and jurisdictions with high levels of financial secrecy, sent there by criminals, corrupt politicians or tax-dodging individuals and multinational companies. Banks in Europe and America profit handsomely from these flows—indeed, many are themselves heavy users of tax havens as a way to reduce their tax bills.

Debut Coverage of GFI's report "Illicit Financial Flows from Developing Countries: 2002-2006." Thanks to John Detrixhe...

Unrecorded Cash Flows Leaving Developing World Outpaces Aid

By John Detrixhe

    Jan. 7 (Bloomberg) -- Unrecorded cash flows, often acquired

from corruption, crime and tax evasion or transferred illegally,

are leaving developing countries at a rate of about $10 for every

$1 of international aid, Global Financial Integrity said.

    Developing countries lost about $858.6 billion to $1.06

trillion in illicit or unrecorded money in 2006, the latest year

of its study, the Washington-based nonprofit organization said in

a report today.

    The GFI’s outflow estimates are conservative because they

don’t include smuggling, trade mispricing or mispriced asset

swaps, said GFI Director Raymond Baker.

    “Those are huge numbers,” Baker said in a telephone

interview. The GFI’s outflow estimate “does not include those

categories, which we would expect to include in future

analyses.”

    The flow of illicit money leaving developing countries

increased at a compounded rate of 18.2 percent each year between

2002 and 2006.

    Asia accounted for about half of the illicit money flowing

out of developing countries, the GFI said. Asia is the “dominant

region” for unrecorded cash leaving developing countries “due

to a large volume of illicit financial flows from mainland

China.”

    Europe, at approximately 17 percent, was second in overall

illicit cash flows from developing countries, the GFI said. The

Middle East and North Africa region and the Western Hemisphere

region each had about 15 percent of illicit outflows. Africa,

which the GFI said had incomplete data, contributed the smallest