Illicit money outflows from the Philippines ranked among the 30 biggest recorded across 148 developing economies in 2015, according to Washington-based Global Financial Integrity (GFI).
In its latest report titled “Illicit Financial Flows to and from 148 Developing Countries: 2006-2015” released this month, the GFI said that illicit financial flows (IFFs) continue to flourish as emerging market countries trade in goods with advanced economies.
GFI is a non-profit research and advisory organization that produces analyses of illicit financial flows, advises governments on policy solutions and promotes pragmatic transparency measures in the international financial system.
It defines IFFs as “money that is illegally earned, used or moved and which crosses an international border.”
It said trade-related IFFs appeared to be both significant and persistent features of developing country trade with advanced economies. As such, trade misinvoicing remains an obstacle to achieving sustainable and equitable growth in the developing world, it added.
Trade misinvoicing, according to GFI, is a method of moving IFFs, and includes the deliberate misrepresentation of the value of imports or exports in order to evade customs duties and value-added taxes, launder the proceeds of criminal activity or to hide offshore the proceeds of legitimate trade transactions, among other motivations.
“The top quintile (30) of countries, ranked by dollar value of illicit outflows, includes resource-rich countries such as South Africa ($10.2 billion) and Nigeria ($8.3 billion) but also European countries including Turkey ($8.4 billion), Hungary ($6.5 billion) and Poland ($3.1 billion) as well as Latin American nations Mexico ($42.9 billion), Brazil ($12.2 billion), Colombia ($7.4 billion) and Chile ($4.1 billion),” it said.
“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),” it added.
The GFI nonetheless said the Philippines alongside Ethiopia, Indonesia and Tanzania had already committed to “strive to curb their losses of revenue due to IFFs under the Addis Tax Initiative aimed at addressing the illegal flows menace.