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Malaysia in 5th place for illicit financial flows from developing countries over the decade ending 2009

The Developing World lost US$903 billion in illicit outflows in 2009, despite the massive financial crisis which rocked the global economy in late 2008. The capital outflows stem from crime, corruption, tax evasion, and other illicit activity.
The report finds that the the vast majority of the drop from US$1.55 trillion to US$903 billion was due to a decrease in volumes of international trade, foreign direct invest, and new external loans, rather than any government action. From 2000 to 2009, developing countries lost US$8.44 trillion to illicit outflows.
Conservatively estimated, Illicit flows increased in current dollar terms by 14.9 percent per annum from the beginning until the end of the decade. Real growth of illicit flows by regions over the nine years is as follows:
  • Africa 22.3 percent,
  • Middle East and North Africa (MENA) 19.6 percent,
  • developing Europe 17.4 percent,
  • Asia 6.2 percent, and
  • Western Hemisphere 4.4 percent.
Asia accounted for 44.9 percent of total illicit flows from the developing world followed by Middle East and North Africa (18.6 percent), developing Europe (16.7 percent), Western Hemisphere (15.3 percent), and Africa (4.5 percent).
Top 10 countries with the highest measured cumulative illicit financial outflows between 2000 and 2009 were:
  1. China: $2.74 trillion
  2. Mexico: $504 billion
  3. Russia: $501 billon
  4. Saudi Arabia: $380 billion
  5. Malaysia: $350 billion
  6. United Arab Emirates: $296 billion
  7. Kuwait: $271 billion
  8. Nigeria: $182 billion
  9. Venezuela: $179 billion
  10. Qatar: $130 billion

IFF Drivers & Trends

  • Trade mispricing was found to account for an average of53.9 percent of cumulative illicit flows from developing countries over the period 2000-2008 and is the major channel for the transfer of illicit capital from China.
  • Despite the global financial crisis and overall decreased levels of illicit financial flows, several countries saw large increases in illicit financial flows. Among these, Poland, Saudi Arabia, Iran, Turkey and Panama each saw large increases in outflows.
  • China continued to lead the world in illicit outflows, losing US$291.8 billion in 2009.
  • Asia accounted for the largest portion of illicit financial flows from the developing world. Over the ten-year period examined, 90 percent, on average, of total illicit flows from Asia were transferred abroad through trade mispricing.
  • Over the decade, illicit outflows from Africa clearly out paced the rest of the world, with a growth rate of 32.5 percent between 2000 and 2009, compared with 9.7 percent for Europe and 7.7 percent for Asia, possibly due to weaker customs monitoring and enforcement regimes.
  • Bribery, kickbacks, and the proceeds of corruptioncontinue to be the dominant channel for the transfer of illicit funds from MENA, developing Europe, while trade mispricing is the clear primary channel out of Asia and the Western Hemisphere.
Go to this link for more detailed readings

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