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Nigeria had $8.3 billion illicit financial flows in 10 years – Report

 

South Africa and Nigeria are ranked among 30 countries with the highest incidences of illicit financial outflows (IFFs), latest Global Financial Integrity (GFI) report on Monday showed.

The report covers the period between 2006 and 2015.

Based on the direction of trade statistics (DOTS) dataset from the IMF for 2015, the report said South Africa was ranked tops among 30 countries, including resource-rich countries (by dollar value of illicit outflows) with $10.2 billion, followed by Nigeria with $8.3 billion.

It revealed IFFs accounted for over 20 per cent of developing country’s trade on average, with a nearly even split between outflows and inflows.

Details

Also, Turkey, Hungary and Poland are listed in the report among the top ranking illicit financial outflow countries with $8.4 billion, $6.5 billion, and $3.1 billion respectively.

The Latin American countries in the group, according to the report, include Mexico ($42.9 billion), Brazil ($12.2 billion), Colombia ($7.4 billion) and Chile ($4.1 billion).

The Asian States in the top 30 countries of this category include Malaysia ($33.7 billion), India ($9.8 billion), Bangladesh ($5.9 billion) and the Philippines ($5.1 billion).

Among top 30 countries ranked by dollar value not taxed or used to finance illegal activities like drug trafficking, the report said, include a regionally diverse group consisting Vietnam ($22.5 billion), Thailand ($20.9 billion), and Indonesia ($15.4 billion).

They also include Latin American countries of Panama ($18.3 billion) and Argentina ($4.8 billion) as well as other countries as Kazakhstan ($16.5 billion), Belarus ($6.1 billion) and Morocco ($3.9 billion).

Other Highlights

Highlights of the report based on Comtrade dataset from the United Nations showed the top 30 of countries ranked by dollar value of illicit outflows to include European nations, Hungary ($7.6 billion), Romania ($5.1 billion) and Bulgaria ($1.8 billion), as well as Latin American countries, namely Mexico ($31.5 billion), Brazil ($12 billion), Argentina ($2.7 billion) and Peru ($2.1 billion).

The Asian nations include Malaysia ($22.9 billion), Thailand ($16 billion), Indonesia ($9.6 billion) and Vietnam ($9.1 billion).

African countries include South Africa ($5.9 billion), Algeria ($4.1 billion), and Tunisia ($1.8 billion).

The list of top 30 countries ranked by dollar value of illicit inflows include a regionally diverse group consisting Poland ($32.3 billion), Romania ($6.8 billion), Indonesia ($10.1 billion) Bangladesh ($2.8 billion), Chile ($3.2 billion), Colombia ($2.9 billion), Morocco ($2.7 billion), and Tunisia $2.3 billion)

According to the report, while the Comtrade dataset is more detailed, many of the 44 small countries do not report trade-related transactions to the UN, among them, Kenya, Nigeria, and Venezuela

Besides, the top 30 countries ranked by illicit outflows as a percentage of total trade with advanced economies, include Mozambique (48.1 per cent), Malawi (44.1 per cent), Zambia (43 per cent), Honduras (39.7 per cent), Namibia (38.7 per cent) and Myanmar (30.8 per cent).

Besides, the top 30 countries ranked by illicit outflows as a percentage of total trade with advanced economies include Uganda (14.7 per cent), Rwanda (13.7 per cent), and Namibia (13.6 per cent), Costa Rica (12.5 per cent), Colombia (12.1 per cent) and Guatemala (11.9 per cent).

The report, the 8th in a series since 2008, analyses illicit financial flows (IFFs) to and from 148 developing and emerging market countries between 2006 and 2015.

It highlights country-level estimates of the illicit flows of money through their trade in goods with advanced economies.

The World Bank, International Monetary Fund, the United Nations and the Organisation of Economic Cooperation and Development see IFFs as “monies illegally earned, used or moved and which crosses an international border”.

Major Finding

A major finding from the report is that trade mis-invoicing, which is accomplished by misstating the value or volume of an export or import on a customs invoice, undermines the impact of international trade in developing nations.

Trade mis-invoicing involves deliberate manipulation of records of the value of imports or exports to evade customs duties and VAT taxes; laundering of proceeds of criminal activities, or hiding offshore the proceeds of legitimate trade transactions, among other motivations.

Economic analysts see growing trade among developing and emerging market countries as an opportunity for greater growth and development.

But, the report said rising mis-invoicing, as a percentage of total trade, shows governments in most developing countries do not benefit from a significant portion of their international trade transactions with advanced economies.

Recommendations

To remove the opacity in the global financial system, the report urged governments and other international regulators to ensure greater financial transparency and curtail illicit outflows by establishing public registries of verified beneficial ownership information on all legal entities, and banks.

The other recommendations include adopting and fully implementing all of the Financial Action Task Force’s anti-money laundering recommendations as well as enforcement of already established laws.

Also, multinational companies must publicly disclose their revenues, profits, losses, sales, taxes paid, subsidiaries, and staff levels on a country-by-country basis; ensure automatic exchange of tax information as endorsed by the OECD and the G20.

Besides, the report wants deliberate trade mis-invoicing for the purpose of evading or avoiding VAT taxes, customs duties, income taxes, excise taxes, or any other form of government revenues to be made illegal, while trade transactions from tax havens should be closely scrutinised.

SOURCE: The Guardian

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