Trails only China, Russia and Mexico in illicit transfer of money
Trails only China, Russia and Mexico in illicit transfer of money
The amount of illicit money that flew out of India in 2013 was the fourth highest in the world after China, Russia and Mexico with such financial outflow from developing economies surging to $1.1 trillion.
According to a report released by Washington-based research and advisory firm Global Financial Integrity on ‘Illicit Financial Flows from Developing Countries: 2004-2013”, the developing and emerging economies lost $7.8 trillion in illicit financial flows from 2004 through 2013, with illicit outflows increasing at an average rate of 6.5 per cent per year — nearly twice as fast as global GDP.
India lost $83.01 billion in illicit financial flows in 2013 and a total of $510.28 billion in the last 10 years with an average outflow of $51.02 billion every year.
China tops the list with a cumulative outflow of $1.39 trillion over the last 10 years. During the same period, Russia has witnessed a total illicit financial outflow of $1.04 trillion while similar outflow from Mexico touched $528.28 billion, a notch higher than India.
The illegal capital outflows stem from tax evasion, crime, corruption, and other illicit activity. The fraudulent mis-invoicing of trade transactions was revealed to be the largest component of illicit financial flows from developing countries, accounting for 83.4 per cent of all illicit flows — highlighting that any effort to significantly curtail illicit financial flows must address trade mis-invoicing.
The study has recommended that the government should significantly boost customs enforcement by providing appropriate training and equipment to better detect the intentional mis-invoicing of trade transactions.
“One particularly important tool for stopping trade mis-invoicing as it happens is access real time, commodity level world market pricing information. This would allow customs official to tell whether a good is significantly under or over priced in comparison to its prevailing world market norm price. This variance could then trigger an audit or another form of further review for the transaction,” it said.
The black money report has also called for greater cooperation between countries for exchange of financial information,stricter enforcement of anti-money laundering regulations and confirmation of beneficial ownership in all banking and securities accounts.
