Sustainable Development Goals Adopted: Illicit Financial Flows Become Part of Development Equation

Washington, DC, 25 September 2015, Global Financial Integrity.

This post was originally published on the Global Financial Integrity website.

Global Financial Integrity applauds the official adoption of the Sustainable Development Goals (SDGs) by the UN General Assembly today in New York. This marks the first time that illicit financial flows—which are estimated at close to $1 trillion per year—are considered a part of the development equation. Previously, development planners counted money entering developing economies (aid, trade, foreign investment and remittances), but the impact of illicit money flowing out of those economies had never been considered.

“This is the goal Global Financial Integrity (GFI) set at its launch in 2006,” GFI President Raymond Baker said in reaction to the new global commitments. “The scourge that illicit financial flows (IFFs) inflict upon poverty alleviation efforts has become well known and now is addressed in the Sustainable Development Goals agenda (target 16.4). This is momentous day for development efforts around the globe,” he noted.

To put the problem in perspective, illicit financial outflows exceeded the total amount of official development aid and foreign direct investment flowing into developing countries in seven of the last ten years (2003-2012).

The next step for the international community is to address the largest component of IFFs, which is trade misinvoicing. This is the intentional misrepresentation of the value of goods being imported or exported in order to move money offshore and to evade various taxes and duties in a developing country—essentially trade fraud. GFI estimates that in 2012 alone some $730 billion in illicit flows due to trade misinvoicing exited developing economies. In the previous 10 years the value of trade misinvoicing is estimated at $5 trillion.

“GFI is prepared to work directly with governments to help meet the challenge of addressing trade misinvoicing,” Baker noted, given the UN’s recognition of the impact illicit flows have on development. “By estimating the magnitude and nature of each country’s misinvoicing challenge, assessing their needs and working collaboratively we will continue to lead in this vitally important development space.”

Notes to Editors

  • Global IFFs grew at an annual rate of over nine percent from 2003- 2012.
  • Thirty-four poor countries had an average IFFs/GDP ratio of above 10 percent in the period 2003-2012.
  • Fifty-two nations had IFFs that were greater than 10 percent of the country’s total trade volume in the 2003-2012 period.
  • GFI spokespersons are available to comment on this statement. To schedule an interview with Mr. Cardamone in Addis Ababa, contact +1 571 277 7310 (mobile) / email hidden; JavaScript is required. To schedule an interview with Mr. Baker or other experts in Washington contact Christine Clough at +1 202 293 0740 ext. 231 (office) / +1 202 510 1548 (mobile) / email hidden; JavaScript is required.


Christine Clough
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+1 202 293 0740 ext. 231