scholarly journals Orphan Imports and Lost Exports in India’s Trade: A Quantitative Assessment of the Significance and Implications for Illicit Financial Flows

2021 ◽  
Vol 9 (11) ◽  
pp. 92-107
Author(s):  
Javaid Akhter ◽  
Praveen Tiwari
Keyword(s):  
Quantitative Assessment ◽  
Mitigation Measures ◽  
Partner Country ◽  
Financial Flows ◽  
Trading Partners ◽  
Illicit Flows ◽  
Import And Export ◽  
Illicit Financial Flows ◽  
The Impact

Orphan imports and lost exports refer to import and export transactions that have been reported by only one of the two trading partners.They are excluded from computations of trade mis-invoicing based on comparing partner country trade statistics. We show that India’s trade with 19 trading partners over 2000-2018 not only indicates substantial trade mis-invoicing but alsosignificant orphan and lost trade in the commodities displaying mis- invoicing. We also show that the amounts involved show an uptrend and are more pronounced in imports, with the orphan imports recorded by India being more than 15 times the orphan imports recorded by partner countries. Therefore, any conclusion on illicit flows through mis-invoicing in these commodities will be incomplete without analysing the impact of orphan and lost trade. We analyse some possible causes and discuss specific commodity-level examples to demonstrate that orphan and lost trade could not only lead to re-adjustment of computed amounts of trade mis-invoicing but, in the worst scenario, indicate serious fraud, with important implications for illicit flows. The paper’s finding that only a few commodities account for bulk of the amounts in orphan and lost trade could facilitate better analysis and mitigation measures.

Efforts to tackle Africa illicit flows will fall short

2015 ◽  
Keyword(s):  
Investor Sentiment ◽  
Sub Saharan Africa ◽  
Financial Systems ◽  
Financial Flows ◽  
Content Type ◽  
Trading Partners ◽  
Illicit Flows ◽  
Illicit Financial Flows ◽  
Financial Transparency ◽  
Sub Saharan

Subject Illicit flows from sub-Saharan Africa. Significance Illicit financial flows (IFFs) from sub-Saharan Africa (SSA) are estimated to be worth up to 50 billion annually, according to a recent UN report. The transfer of illicit flows through international financial systems has created opportunities for governments in European destination countries to recover plundered funds and prosecute those involved. These efforts set new legal precedents, but the rulings will be difficult to implement where governments are worried about the effect on investor sentiment. Impacts New and important African trading partners, from China to Dubai, will create new networks of illicit financial flows. Questions of financial transparency will arise, though irrespective of where the 'destination' negotiating partner is from. China's extra-territorial anti-bribery legislation shows efforts to comply with 'responsible' business, but so far lacks implementation.

scholarly journals Hidden Inequality: How Much Difference Would Adjustment for Illicit Financial Flows Make to National Income Distributions?

2016 ◽  
Vol 7 (2) ◽  
Author(s):  
Alex Cobham ◽  
William Davis ◽  
Gamal Ibrahim ◽  
Andy Sumner
Keyword(s):  
National Income ◽  
Financial Flows ◽  
Preliminary Results ◽  
Income Distributions ◽  
Top Incomes ◽  
Recent Innovation ◽  
Illicit Flows ◽  
Illicit Financial Flows ◽  
Using Data

AbstractA recent innovation in measuring inequality is the incorporation of adjustments to top incomes using data from tax authorities, revealing higher inequality. The thesis of this paper is that the incorporation of estimates of income from illicit financial flows (IFF), reflecting untaxed capital, may be as significant to national inequality – but with greater variation across countries. We propose a method of adjusting national inequality data for illicit flows, and present preliminary results. These estimates suggest that untaxed illicit flows could be as important as (taxed) top incomes to estimates of inequality – highlighting the importance of improving estimates of underlying illicit flows.

scholarly journals Remedies to Illicit Financial Flows from Transfer Pricing of Services and Hosting Intellectual Property in Kenya

2017 ◽  
Vol 3 (1) ◽  
pp. 113-130
Author(s):  
Charles Gordema
Keyword(s):  
Transfer Pricing ◽  
Primary Concern ◽  
Financial Flows ◽  
Taxable Income ◽  
Global Corporation ◽  
Intellectual Assets ◽  
Global Corporations ◽  
Illicit Financial Flows ◽  
The Impact ◽  
Pricing Of Services

Numerous reports in the last decade have focused on the challenges to African economies that emanate from the illicit transfers of funds and other valuable assets within some global corporations. A primary concern is the impact of these transfers on the taxable income of African subsidiaries. Two broad categories of intra-group transfers are of particular interest, partly because of the complexities they raise. One comprises transfers in payment of services exchanged among associated enterprises, while the other pertains to transfers by subsidiaries in payment of the value of intellectual assets attributed to the corporate centre of the global corporation. This article highlights the challenges raised by these transfers through case studies. It examines possible mechanisms to mitigate the challenges, drawing attention to current and impending developments. It concludes that there are good prospects for curbing illicit transfers linked to the examined types of transactions.

Illicit Financial Flows, Sovereign Debt, and Human Rights

2018 ◽  
pp. 317-336
Author(s):  
Cephas Lumina ◽  
Mulesa Lumina
Keyword(s):  
Sustainable Development ◽  
Human Rights ◽  
Sovereign Debt ◽  
Poverty Reduction ◽  
External Debt ◽  
Legal Framework ◽  
Financial Flows ◽  
Illicit Financial Flows ◽  
External Borrowing ◽  
The Impact

In recent years, there has been increasing attention to the problem of illicit financial outflows—broadly defined as funds that are illegally earned, transferred and utilized outside the country of origin in contravention of that country’s relevant legal framework. Illicit financial outflows divert resources away from activities that are essential for poverty reduction, sustainable development and the realisation of all human rights. They also contribute to the accumulation of external debt as governments that lack domestic resources as a result of these flows may resort to costly external borrowing. This chapter examines the nature of illicit financial flows, the factors that facilitate them and the measures taken by states, individually and collectively, to tackle them. It also discusses the impact of these flows on the realisation of human rights in the countries of origin and proposes concrete measures by which to curb illicit financial flows.

Illicit financial flows: HSBC case study

2018 ◽  
Vol 21 (2) ◽  
pp. 231-246 ◽  
Author(s):  
Mohammed Ahmad Naheem
Keyword(s):  
Money Laundering ◽  
Financial Services ◽  
Banking Sector ◽  
Financial Flows ◽  
Content Type ◽  
Services Sector ◽  
Financial Services Sector ◽  
Beneficial Ownership ◽  
Illicit Financial Flows ◽  
The Impact

Purpose This paper provides examples of how illicit financial flows (IFFs) are occurring through the formal banking and financial services sector. The purpose of this paper is to explore which elements of anti-money laundering (AML) compliance need to be addressed to strengthen the banking response and reduce the impact of IFFs within the banking sector. Design/methodology/approach The paper uses a number of sources of secondary data including the Swiss leaks data for HSBC and also the Permanent Sub Committee Report on HBUS in the USA, the OECD report on money laundering compliance and Financial Action Task Force (FATF) guidelines on beneficial ownership. It links this information to the relevant IFF reports produced through Global Financial Integrity to highlight the connection between banking AML compliance and IFF transfers through the banking sector. Findings The main findings from the analysis are that banks have a greater legal responsibility towards detecting and reporting suspicious transactions than they would have previously considered. This includes identifying the source and purpose of fund transfers and establishing the beneficial ownership of recipients. Research limitations/implications The research topic is new; therefore, analysis papers and other academic writing on this topic are limited. Practical implications The research paper has identified a number of implications to the banking sector on addressing AML deficiencies, especially the need to improve standards of beneficial ownership verification and customer due diligence (CDD) checks for politically exposed persons. Social implications This paper has implications for the international development and the global banking sector. It will also influence approaches to AML regulation, risk assessment and audit within the broader financial services sector. Originality/value The originality of this paper is the link between the HSBC cases and IFFs and the implications this will have for future AML compliance processes across the banking sector.

scholarly journals Illicit financial flows and the Global South: A review of methods and evidence

2020 ◽  
Author(s):  
Kasper Brandt
Keyword(s):  
Multinational Enterprises ◽  
The United States ◽  
Global South ◽  
Financial Assets ◽  
Profit Shifting ◽  
Tax Havens ◽  
Financial Flows ◽  
Illicit Flows ◽  
Illicit Financial Flows ◽  
Domestic Resource

Illicit financial flows (IFFs) constitute a major challenge for development in the Global South, as domestic resource mobilization is imperative for providing crucial public services. While several methods offer to measure the extent of IFFs, each has its benefits and drawbacks. Critically, methods based on the balance of payments identity may capture licit as well as illicit flows, and a method based on macroeconomic trade discrepancies suffers from doubtful assumptions. The most convincing estimate to date demonstrates that individuals hold financial assets worth around ten per cent of global GDP in tax havens. Evidence further indicates that countries in the Global South are more exposed to individuals and multinational enterprises illicitly transferring money out of the country. Further research is warranted on profit shifting out of countries in the Global South and the effectiveness of anti-IFF policies in countries outside Europe and the United States.

scholarly journals Empirical Investigation of Capital Flight and Illicit Financial Flows, Economic Growth in Palestine

2019 ◽  
pp. 1-15
Author(s):  
Nemer Badwan ◽  
Mohammed Atta
Keyword(s):  
Economic Growth ◽  
Granger Causality ◽  
The State ◽  
Balance Of Payments ◽  
Capital Flight ◽  
Causality Test ◽  
Financial Flows ◽  
Study Results ◽  
Illicit Financial Flows ◽  
The Impact

In the present study was to verify the relationship between capital flight and illicit financial flows, exhibiting the impact of stable economic growth in Palestine during the period (2009-2018). We also use models of the balance of payments of the State, the study results showed that the total illicit financial flows, about $14.42 million annually, 16.4% of GDP. In addition, through the application of the net omissions and style error in the balance of payments and expenditures, the total capital flight estimated at $26.61 million, 19.6% of GDP. The Granger causality test shows that economic growth granger causes both the illicit financial flows and the capital flight. The study also found that there is a negative and significant relationship between economic growth and capital flight. Furthermore, there is a positive relationship between illicit financial flows and capital flight. We have examined theory (Granger) causality, which shows that economic growth causes all of the illegal financial flows and capital flight. The study showed also negative correlation and significant between economic growth and capital flight. Besides, it can be this relationship is negative between illicit financial flows and capital flight. This relationship can be detailed in this research. It seems this experimental investigation is also a strong relationship and engagement between capital flight and financial flows from the standpoint of their impact on economic growth in Palestine. It can be summarized in the study that the process of capital flows and capital flight represent an important role in raising the rate of economic recovery in the country and that the flow of capital within the state is one of the most important factors for national economic growth.

International Efforts to Combat Corruption

2021 ◽  
pp. 494-515
Author(s):  
Mathis Lohaus ◽  
Ellen Gutterman
Keyword(s):  
Soft Law ◽  
Future Research ◽  
Transnational Advocacy ◽  
International Treaties ◽  
Financial Flows ◽  
Advocacy Campaigns ◽  
Illicit Financial Flows ◽  
And Behavior ◽  
The Impact

Attempts to improve the domestic quality of government often involve international arrangements and the fight against corruption is a prominent example. Since the 1990s, anticorruption pledges, international treaties, soft law arrangements, transnational advocacy campaigns, and other commitments have proliferated to control bribery and corruption in a range of contexts. This chapter surveys the literature on the emergence and characteristics of these various initiatives and provides an overview of what is known about their impacts on policy and discourse, law, and behavior. While empirical evidence on the impact of international anticorruption efforts is mixed, existing studies and directions for future research suggest that the quality of government in highly developed states is crucial when it comes to controlling transnational business bribery, money laundering, and other illicit financial flows.

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