Global Financial Integrity Launches New Report on Illicit Financial Flows from Mexico

kristy Reforming Global Finance

Monday, January 30, 2012

From the Task Force Blog:

Global Financial Integrity Launches New Report on Illicit Financial Flows from Mexico

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GFI Mexico Report

Mexico Hemorrhages US$872 Billion to Crime, Corruption, Tax Evasion from 1970-2010
Global Financial Integrity (Press Release), January 29, 2012

MEXICO CITY / WASHINGTON, DC – Crime, corruption and tax evasion cost the Mexican economy US$872 billion between 1970 and 2010 according to a new report from Global Financial Integrity (GFI), a Washington, DC-based research and advocacy organization. The illicit financial outflows, which averaged a massive 5.2% of GDP, grew significantly over the 41-year period studied from just US$1 billion in 1970 to US$68.5 billion in 2010.

“This is a devastatingly large amount of money for any developing country to lose,” said Raymond W. Baker, director of GFI. “$872 billion is gone, which could have been used to develop the Mexican economy, to invest in education, to build roads, or to fight the drug cartels. The negative ramifications are huge for everyday Mexicans.”

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Exclusive: Mexico pays heavy price for tax evasion, report finds
The Dallas Morning News, January 28, 2012
By Alfredo Corchado

MEXICO CITY — In a nation with nearly half the population living in poverty, more than $872 billion has been lost to the Mexican economy over four decades to tax evasion, corruption and criminals, according to a report prepared by the group Global Financial Integrity.

The report buttresses long-held concerns about the Mexican government’s inability to control its booming underground economy and the outflow of money to foreign havens.

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Nearly $900 bln in illict financial flows leaves Mexico 1970-2010
TrustLaw (Reuters), January 29, 2012
By Lisa Anderson

Illicit financial flows leaving Mexico rose sharply between 1970 and 2010, amounting to $872 billion and with deliberate trade mispricing constituting the lion’s share of this, says a report by Global Financial Integrity (GFI).

The result is costly for Mexico, averaging a loss of about 5.2 percent of its gross domestic product (GDP) per year between 1970 and 2010, GFI said in its report, “Mexico: Illicit Financial Flows, Macroeconomic Imbalances, and the Underground Economy,” released on Sunday.

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GFI in the News

Penang, Selangor proof Malaysia will thrive under Pakatan, says Pua
The Malaysian Insider, January 28, 2012
By Debra Chong

The DAP’s Tony Pua today slammed Datuk Seri Najib Razak for knocking Pakatan Rakyat’s (PR) economic policies in a bid to claw more support from voters ahead of a general election.

We have proven that our policies do not destroy the economy but have made Selangor and Penang the top investment destination for foreign investors,” the opposition party’s economic expert said in a statement today.

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No indication we will go bankrupt
The Sun Daily (Malaysia), January 2012
By Tony Pereira

As I browsed Facebook last week, I came across an article which suggested that Malaysia may go bankrupt as early as 2019 (one year before Vision 2020) if the current government spending was left unchecked.

I decided to do some research. In 2019, my son will still be schooling and it would be a concern if we ended up where Greece, Italy and others in Europe are today.

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Pua to Najib: Check your own policies first
Free Malaysia Today, January 28, 2012
By Tarani Palani

PETALING JAYA: Pakatan Rakyat today lashed out at Prime Minister Najib Abdul Razak for labeling the opposition’s economic policy proposal as “short-termed” and a “recipe for disaster”.

DAP’s national publicity chief, Tony Pua said that Najib should first reflect on his own administration’s economic mismanagement before making “unfounded allegations” against Pakatan.

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The Trillion Dollar Con
The Southern Times (South Africa), January 27, 2012
By Felix Njini

In the past four decades, Africa has lost US$1.8 trillion through intricate scams involving Western companies and local officials. The looting continues up to today and benefits the West while depriving Africa of development funds.

Africa lost more than US$1.8 trillion between 1970 and 2008 in illicit financial outflows involving multinational corporations (MNCs) through tax evasion, mis-invoicing, import over-invoicing and under-pricing of exports.

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Money Laundering

Secrecy hampers money laundering fight
Swiss Info, January 30, 2012
By Jean-Michel Berthoud

Switzerland’s bank secrecy legislation is causing problems in the international fight against money laundering.

It means that the Swiss Money Laundering Reporting Office (MROS) is obliged by law to hold back information from its foreign counterparts.

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Exclusive: Senate investigating HSBC for money laundering
Reuters, January 25, 2012
By Carrick Mollenkamp, Brian Grow and Brett Wolf

HSBC Holdings PLC is under investigation by a U.S. Senate panel in a money-laundering inquiry, the latest step in a long-running U.S. effort to halt shadowy money flows through global banks, according to people familiar with the situation and a company securities filing.

The inquiry being conducted by the Senate Permanent Subcommittee on Investigations could yield a report and congressional hearing later this spring, these people said. The subcommittee has a history of conducting high-profile hearings that have proved embarrassing for the world’s biggest banks.

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Exclusive: Vatican rewrites anti-money laundering, terror finance law to comply
The Associated Press, January 27, 2012

VATICAN CITY — The Vatican has rewritten its 2010 anti-money laundering law after European inspectors found that it didn’t fully meet their tough standards to combat the financing of terrorism.

The new law, a copy of which was obtained Friday by The Associated Press, requires the Vatican to create a list of terror organizations based on those issued by the United Nations and requires the Vatican enter into agreements with other countries to share financial information.

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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.

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