On the Dirty Money Trail

A report released today from Global Financial Integrity (GFI) examines where trillions of dollars in illicit finances—the proceeds of crime, corruption, and tax evasion are being deposited.

The new report, The Absorption of Illicit Financial Flows from Developing Countries: 2002-2006, rounds-out the groundbreaking analysis put forward in GFI’s 2008 report Illicit Financial Flows from Developing Countries: 2002-2006, which estimated that the developing world was losing $1 trillion per year to illicit financial practices.

Report findings include:

• Where does the $1 trillion in illicit capital flight from developing countries end up?
• What are the regional trends for illicit financial outflows? Are there linkages between the country origin and the point of deposit?
• What impact did the terrorist attacks of 2001 have on illicit flows and the global shadow financial system?
• Who is responsible for keeping track of total cash deposits moving through the world financial system and how accessible is that information to the general public and national governments?
• What impact does the annual loss of hundreds of billions of dollars have on developing nations?
• How are these hundreds of billions of dollars removed from developing countries and how may these illicit financial outflows be curtailed?
  

“We are crossing a threshold in global finance regulation and poverty alleviation with these illicit flows studies,” said GFI director Raymond Baker. “For every $1 in aid that the Western world is sending into developing countries, $10 is lost. Our first report looked at how much these countries were losing. Today we have an idea of where that money is ending up. Halting this annual loss of capital is crucial to successful poverty alleviation and economic development.”