Global study ranks Malaysia fifth for the largest exporter of illicit capital flow

The latest study released Tuesday by a Washington DC-based research and advisory organization, Global Financial Integrity (GFI), recorded RM3.4 trillion (US$991.2 billion) of capital illicitly drained out of developing and emerging economies in 2012, representing a record level of crime, corruption, and tax evasion.

The study is the first GFI analysis to include estimates of illicit financial flows for 2012.

Titled “Illicit Financial Flows from Developing Countries: 2003-2012,” the report finds that illicit outflows are growing at an inflation-adjusted 9.4 percent per year—roughly double global GDP growth over the same period.

Also in the top 10 country sources of illegal capital outflows are a number of dynamic middle-sized economies: Malaysia, Mexico, Saudi Arabia and Thailand.

The report says that the largest outflows came from giant, still poorly-regulated economies like Brazil, China, India and Russia.

The study shows that these outflows are growing fastest in and taking the largest toll, as a share of GDP, on some of the poorest regions of the world.

“These findings underscore the urgency with which policymakers should address illicit financial flows. It’s extremely troubling to note just how fast illicit flows are growing,” stated Dr. Kar, the principal author of the study.

The largest component of illicit financial flows from developing countries is the fraudulent misinvoicing of trade transactions, accounting for 77.8 percent of all illicit flows.

The report recommends that world leaders focus on curbing the opacity in the global financial system, which facilitates these outflows.

According to the report, the 10 biggest exporters of illicit financial flows over the decade are: