REUTERS
Global Financial Integrity (GFI), a Washington, DC-based research and advisory organization, estimates that illicit financial flows (IFFs) from Russia between 1994 and 2012 totaled $1.341 trillion, thus placing it at the top of the rating of the countries with the highest IFF level along with India, the Philippines, Mexico, and Brazil, according to Russian newspaper Gazeta.ru.
About $70.5 billion on the average was moved from Russia illegally each year over the period, while IFFs accelerated from 2010 to 2012 to an average of $140 billion per year, which was more than 8.8% of the country's GDP, GFI said.
The peak year was in 2011 when $174 billion – an amount equal to 9.9% of Russia's GDP – fled the country illegally, according to the report.
A total of 90% of IFFs from Russia were due to the misinvoicing of trade — a way of funneling money across borders by deliberately raising the volume of actual exports, and the funds thus earned are then accumulated in foreign bank accounts.
Apart from Russia, GFI examined other developing nations such as India, Brazil, Mexico and the Philippines. The report noted that illegal movements of money were one of the main obstacles to developing the economy in these countries.
Russia has the highest IFFs-to-GDP ratio even in comparison with its 'closest competitors.' Namely Mexico and the Philippines demonstrated 4.5% of GDP, India 1.5% of GDP, and Brazil 1.6% of GDP.
Russia also tops the ranking in absolute values with $1.341 trillion in IFFs in 19 years. For example, Mexico saw $1.156 trillion in IFFs in a 42-year period, the report said, while IFFs from India amounted to $700 billion in 64 years.
The organization notes that not only large market players, but also medium and small-sized businesses are involved in illicit financial flows from Russia. Huge illegal transfers are possible due to a lack of control and instability in the economy of the country, experts say.
Illicit financial flows are illegal movements of money or capital from one country to another. GFI classifies this movement as an illicit flow when the funds are illegally earned, transferred, and/or utilized.
Close to $1 trillion in illicit money flowed out of developing countries in 2012.
Illicit financial flows exceed the total amount of official development aid and foreign direct investment flowing into developing countries in seven of the last ten years.