Global Financial Integrity

 

Illicit Financial Flows

Opportunity Knocks to Address Illicit Financial Flows

GFI Calls for a Sustainable Development Goal (SDG) to Halve Illicit Flows from Trade Misinvoicing by 2030

As I noted in yesterday’s post, the momentum toward global action on illicit flows by the international community (i.e. the United Nations, OECD, G20, etc) has grown substantially over the past three years.  Indeed, last October, the World Bank Group noted that “there is little doubt that [illicit] flows have a pernicious impact on development” and the UN group working on development financing said that “domestic resource mobilization is being severely undermined by illicit financial flows.”  And, in January, the African Union stated that “it is imperative to curtail illicit financial flows [to ensure] the efficient and effective use of resources.”

But, while there is an understanding of the problem and a willingness to act, there is no broad consensus on what should be done.  The opportunity that presents itself comes from a once-in-a-generation confluence:

  1. the international community agreeing on the need to reduce illicit financial flows (IFFs), and
  2. 2) the fact that the Post-2015 development agenda is open for debate.

The political will already exists to address the IFF challenge in concrete ways.  Now, the question is: what does a SMART (i.e. Specific, Measurable, Achievable, Relevant, Time-bound) SDG target on illicit flows look like?

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The “Big Mo” in the Drive to Address Illicit Financial Flows

GFI Participates in High Level OECD Side-Event on Curbing Illicit Flows during UN General Assembly Meetings

On September 24th, tucked away in a quiet conference room in the basement of the UN General Assembly building, an extraordinary conversation took place on the future of global development.  But, despite the gathering of representatives from the OECD, UN, World Bank, USAID and the Mexican, Australian, and Nigerian governments, the event received exactly zero media coverage.

Titled “Curbing Illicit Financial Flows for Domestic Resource Mobilization and Sustainable Development in the Post-2015 Era,” the focal point of the two-hour discussion was how the international community could, as the program description put it, “identify concrete international actions needed” to curtail illicit financial flows out of developing country economies.  While other events were given more airtime and other issues may require more immediate attention, some ideas presented at the panel could be transformational in terms of how countries address the scourge of illicit flows and how the development agenda is funded.

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China’s Illicit Outflows Were US$1.08 Trillion from 2002-2011

GFI’s Current Methodology Finds Illicit Outflows from China Totaled US$1.08 Trillion from 2002-2011, Not US$2.83 Trillion from 2005-2011

With the anti-corruption drive underway in China, our estimates of illicit financial flows have been in the news a lot lately.  This is for good reason; there is a ton of illicit money gushing out of China.

But, if you have been reading multiple stories on this topic, you might be a little confused about the precise scale of the problem facing China.

Prominent outlets such as the Financial Times, the South China Morning Post, and China Daily, among others, have all reported over the past week that:

“The US-based non-profit group Global Financial Integrity estimates illegal flows out of China amounted to $2.83tn between 2005 and 2011.”

While other major sources such as Businessweek and the Heritage Foundation have stated:

“Between 2002 and 2011, $1.08 trillion of illicit funds were spirited out of China, estimates Washington (D.C.)-based nonprofit Global Financial Integrity.”

These estimates are widely different.  Some of these outlets must be incorrect in their reporting, right?

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China’s Corrupt Economic Fugitives are Finding a Home in the U.S.

U.S. Laws Enable the Outflow of Illicit Money from China, which Totaled US$1.08 Trillion from 2002 to 2011

Corrupt politicians, fugitive officials, and leaders on the lam have found a new safe haven to call home—the United States of America.

Interestingly enough, despite the sometimes contentious relationship between the two countries, the U.S. has now become the destination of choice for China’s “economic fugitives” running from corruption charges in their home country according to China Daily and the International Consortium of Investigative Journalists.

Many of these fugitives are known as “naked officials”, those who have moved their assets and family abroad to avoid regulations and scrutiny. Much of the time, these are high ranking leaders who have decided to move their wealth abroad should a corruption investigation arise.

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Illicit Finance Journalism Programme Launches Fourth Training Workshop

CIJ and TJN will be holding a workshop on illicit finance journalism.

IFJP Seeks Applicants for its Four-Day Media Training Program on Illicit Finance, Financial Secrecy, and Asset Recovery by August 24th

If you weren’t able to sign up for the Thomson Reuters Foundation’s media training program on illicit finance and tax abuse in Africa, you’re in luck because another opportunity has just opened up!

The Illicit Finance Journalism Programme (IFJP) has launched its fourth training program, Introduction to Illicit Finance, Financial Secrecy, and Asset Recovery Autumn 2014. This is a four-day training workshop that will focus on equipping journalists from the developing world to expose illicit financial practices—from corruption to money laundering to tax evasion—and analyze the impact such illicit financial activity has on an economy and society.

According to the IFJP, the workshop aims to:

bring together journalists from countries where often corruption, tax havens and harmful tax practices stall development and entrench poverty.

To do so, the program will focus on teaching journalists how to access company accounts, how to investigate corruption stories, how to track the international policy agenda, and a number of other foundational steps in understanding the offshore world and illicit financial flows.

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Join Us for Our Upcoming Conference on Illicit Financial Flows in Brazil

GFI and MINDS will hold a joint conference on Illicit Financial Flows in Brazil's Rio de Janeiro.

Joint GFI/MINDS Event, Taking Place September 9th in Rio de Janiero, Will Launch New, In-Depth Research on Brazil’s Illicit Financial Flows

We are pleased to announce the dates of our much anticipated conference in BrazilIllicit Financial Flows in Brazil: A Hidden Resource for Improving Prosperity and Economic Stability.

Join us on September 9th for a joint conference in Rio de Janeiro hosted by GFI and the Multidisciplinary Institute for Development and Strategies (MINDS).

The conference will focus on illicit financial flows in Brazil. According to our previous research, Brazil has a significant problem with illicit outflows, which totaled roughly US$193 billion from 2002 through 2011, making it the 7th largest exporter of illicit capital globally.

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Why Tanzania Needs to Be Careful about Gas Revenues

More Transparency and Accountability Are Needed, if Tanzania Is to Truly Benefit from its New-Found Gas Reserves

Tanzania’s new-found gas reserves are valued at an estimated $20 billion. Many look at these prospects with optimism, as this revenue may help Tanzania achieve its goal of becoming a middle-income country by 2025. But for others, the situation is more precarious.

Tanzania has been in the same situation when it became a major source of gold not even two decades ago. Today, though Tanzania is still the third largest exporter of gold, there is widespread agreement that the mining sector did not produce the revenue it should have, nor was the effect of the growing industry felt in the population. Tanzania still stands 152nd out of the 182 countries on the Human Development Index, despite having exported billions of dollars worth of gold throughout the past two decades. The value of Tanzania’s mining exports grew to $1.5 billion in 2010, but annual government revenue from its sale was only about $100 million, or about 7%.

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New Thomson Reuters Foundation Media Program to Investigate Illicit Finance, Tax Abuse

Thomson Reuters Foundation Seeks Applications from African Media for Illicit Finance Training and Assistance Program by July 28th

Are you an ambitious journalist in Africa with an interest in probing illicit finance, money laundering, and tax related abuses? Or, perhaps, you represent an outstanding, independent media organization based in Africa with a desire and reputation for exposing financial crime and corruption?

Either way, the Thomson Reuters Foundation is launching a new three-year program assisting African media on the reporting of illicit finance and tax abuse, and they are hoping that you will apply.  According to the TR Foundation:

African economies lose huge sums of money every year through practices such as tax evasion and avoidance, often carried out by large companies. However, this phenomenon receives little attention and is rarely the subject of in-depth investigation.

Thomson Reuters Foundation believes that African media has a vital role to play in bringing this issue to light and exposing tax abuse where it is taking place. We also believe that collaboration between journalists and media organisations across borders is essential when reporting on money flows between countries.

We are seeking outstanding journalists and ambitious, independent media organisations to join us in this new project.

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