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GFI Philippines Report

Smuggling cost the Philippines $3 billion in 2011
Quartz, February 3, 2014

By Gwynn Guilford

Illicit capital flows into and out of the philippines are sapping billions from the real economy, perpetuating corruption, depriving the government of tax revenue, and hurting growth, according to a report by Global Financial Integrity (GFI), a non-profit group.

Most of this money-laundering is facilitated through what’s known as fake trade invoicing, which allows exporters and importers to avoid paying taxes on traded goods. Exporters declare only a fraction of their actual sales to the philippines customs authority, and hold the payment for the remainder in an offshore bank account to dodge taxes. Importers, meanwhile, underreport the amount they’re bringing into the country, smuggling the rest in effectively duty-free. Understated imports—or, in more everyday language, smuggling—account for most of the fake invoicing, or $2.97 billion; undeclared exports added another $880 million.

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US$410.5bn in Illegal Money Flowed in or out of Philippines from 1960-2011, Finds New GFI Study
Global Financial Integrity Press Release, February 4, 2014

Philippine Economy Loses US$132.9 Billion in Illicit Financial Outflows from Crime, Corruption, Tax Evasion over 52-Year Period; US$277.6 Billion Transferred Illegally into the Philippines

MANILA, Philippines / WASHINGTON, DC – More than US$410 billion flowed illegally into or out of the Philippines between 1960 and 2011—reducing domestic savings, driving the underground economy, and facilitating crime and corruption—according to a new report to be published Tuesday by Global Financial Integrity (GFI), a Washington DC-based research and advocacy organization. Over the 52-year period studied, the report finds that the Philippines suffered US$132.9 billion in illicit financial outflows from crime, corruption, and tax evasion, while US$277.6 billion was illegally transferred into the country, predominantly through the misinvoicing of trade transactions.

The study, titled “Illicit Financial Flows to and from the Philippines: A Study in Dynamic Simulation, 1960-2011,” [HTML | PDF – 2.5MB] estimates that the misinvoicing of trade transactions has cheated the Philippine government of at least US$23 billion in lost tax revenue since 1990.

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Aquino govt institute reforms to curtail illicit financial outflows from crime, corruption and tax evasion, Coloma says
Government of the Philippines, February 5, 2014

The Aquino government has undertaken reforms to curtail illicit financial outflows from crime, corruption, and tax evasion that beset the country from 1960 until 2011, Presidential Communications Operations Office Secretary Herminio “Sonny” Coloma Jr. said on Wednesday. – See more at: http://news.pia.gov.ph/index.php?article=1781391597896#sthash.6DDCwYsK.dpuf

The Communications Secretary issued the statement following the release of the report of the Global Financial Integrity (GFI) that the Philippines had suffered US$132.9 billion in illicit financial outflows from crime, corruption, and tax evasion for the period of over five decades. – See more at: http://news.pia.gov.ph/index.php?article=1781391597896#sthash.6DDCwYsK.dpuf

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‘Who suffers when there’s smuggling? The poorest Filipinos’
Rappler, February 4, 2014

By Paterno Esmaquel II

The Philippine government vowed to end smuggling after an international advocacy group on Tuesday, February 4, said $410 billion in illicit transactions flowed in and out of the Philippines over the past 52 years.

Bureau of Internal Revenue (BIR) Commissioner Kim Henares said the war on smuggling, in the end, will help the poorest Filipinos.

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Record smuggling under P-Noy
The Philippine Star (Op-Ed), February 6, 2014

By Ernesto M. Maceda

Global Financial Integrity (GFI), a Washington-based US think tank, has come up with a mind-boggling report that the Philippine loses P65.5 billion a year to smuggling and illegal trading. It reported that the highest record loss was achieved in 2011, with an astonishing P173.5 billion loss of revenue.

This report now fully documents the continued incidence of smuggling from 1960 to 2011, with the biggest recorded under the Aquino administration.

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Illicit
The Philippine Star (Op-Ed), February 6, 2014

By Alex Magno

Those are staggering numbers featured in a recent report put out by Global Financial Integrity (FGI), an anti-graft research group looking into illicit money flows worldwide.

Over a five-decade period, GFI estimates illicit money outflows from the Philippine economy totaled $132.9 billion. These illicit money outflows very likely represented proceeds from crime, corruption and tax evasion. For purposes of comparison: that dollar figure is more than twice our outstanding foreign debt.

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GFI in the News

Europe must ‘walk the walk’ on corruption – Mo Ibrahim
Thomson Reuters Foundation, February 4, 2014

By Luke Balleny

Europeans talk about prosecuting corruption but unlike the United States’ officials, they do not follow through, Anglo-Sudanese billionaire and philanthropist Mo Ibrahim said in a speech on Monday.

“Why are European companies prosecuted in the U.S. but not in their home countries?” Ibrahim said. “Those guys in the U.S., they walk the walk when it comes to anti-corruption.

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LLC information disclosure focus of bill
Wilmington News-Journal, February 4, 2014

By Maureen Milford

In an effort to fight off criticism that Delaware is a secret haven for untraceable companies engaged in suspected financial misdeeds, Gov. Jack Markell’s administration is taking a small step to increase disclosure.

Last week, a bill was introduced in the state House of Representatives that is designed to enhance transparency by requiring business entities known as limited liability companies to maintain records that identify the names and addresses of members and managers.

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US$68.9 Billion Flowed Illegally into or out of Emerging EU Economies in 2011 
Global Financial Integrity Press Release, February 3, 2014

GFI Urges EU Parliament Legislators to Follow UK’s Lead, Ban Anonymous Shell Companies

WASHINGTON, DC – Global Financial Integrity (GFI) today urged members of the European Parliament to support the creation of public registries of corporate ownership information in the upcoming vote on key revisions to the European Union (EU) Anti-Money Laundering Directive (AMLD). The pressure comes as GFI revealed that nearly US$70 billion in illicit financial flows—the proceeds of crime, corruption, and tax evasion—flowed into or out of developing and emerging EU member-states in 2011.

GFI—a Washington, DC-based research and advocacy organization that studies and promotes policies to curtail illicit financial flows—noted that the February 13th vote would be a key moment for the future of financial transparency.

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EU says corruption “breathtaking”, with CEE among worst offenders
Business News Europe, February 3, 2014

A series of reports released February 3 showed just how much of a problem corruption is becoming in the new member states of the EU.

The European Commission’s admission on February 3 that corruption across the EU is “breathtaking” comes as no surprise to those like bne that have extensively covered the worsening problem. Nor does the fact it is most widespread in the states of Emerging europe and the Mediterranean. A report by Global Financial Integrity (GFI) released the same day revealed that nearly $70bn in illicit financial flows — the proceeds of crime, corruption, and tax evasion — flowed into or out of emerging EU member states in 2011.

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Global Financial Integrity (GFI) promotes national and multilateral policies, safeguards, and agreements aimed at curtailing the cross-border flow of illegal money. In putting forward solutions, facilitating strategic partnerships, and conducting groundbreaking research, GFI is leading the way in efforts to curtail illicit financial flows and enhance global development and security.

For additional information please visit http://www.gfintegrity.org.


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