USD 75 billion in capital flight!

The Global Financial Integrity (GFI) in its latest report titled 'Illicit Financial Flows to and from Developed Countries: 2005-2014' states Bangladesh has lost anywhere between USD 6 billion to USD 9 billion thanks to trade misinvoicing and other unrecorded outflows. As per 2014 data, our total international trade value stood slightly over USD 70 billion and trade misinvoicing was between 7 to 11 percent. If we take the highest estimate (USD 8.97 billion), that figure is big enough to pay for three Padma bridges!

Illicit financial flows (IFFs) represent a major hurdle for emerging economies such as ours because the flow can be both outgoing and incoming. The decade under review (2005-2014) reveals that the outflow has nearly doubled over the 2004-2013 period, and as in our case, the highest capital flight was recorded in 2013 when Bangladesh experienced serious political turmoil.

When we take into context the areas of illicit fund flow, it is trade misinvoicing that remains the primary tool for illegal transfer of funds out of a country. In this practice, trading partners write their own trade documents, or arrange to have the documents prepared in a third country (also known as re-invoicing). The practice allows for "fraudulent manipulation of the price, quantity, or quality of a good or service on an invoice and allows criminals, government officials, and commercial tax evaders to shift vast amounts of money across international borders quickly, easily, and nearly always undetected" as stated in the last GFI report. What it all boils down to is this: a failure to check this unethical practice is basically depriving the national economy of much-needed financial resources which could be utilised for our national development.