India comes 4th in annual black money outflows, reports say

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India comes 4th in annual black money outflows, reports say
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With a whopping USD 51 billion drained off the country annually between 2004 and 2013, India has come 4th in annual black money outflows, as per a report by Global Financial Integrity (GFI), a Washington-based research and advisory organisation.

China has topped the list with USD 139 billion annual average outflows of illicit finances, followed by Russia (USD 104 billion per annum) and Mexico (USD 52.8 billion per annum).

These illicit capital outflows branch out from tax evasion, crime, corruption and other unlawful activities. According to the report, a record USD 1.1 trillion flowed illicitly out of developing and emerging economies in 2013, the last year for which the data was made available.

In totality, during the 2004-2014 decade, more than half a trillion (USD 510 billion) went out of India, USD 1.39 trillion from China and USD 1 trillion from Russia.

"This study clearly demonstrates that illicit financial flows are the most damaging economic problem faced by the world's developing and emerging economies," GFI President Raymond Baker, a long-time authority on financial crime, told ET.
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"This year at the UN the mantra of 'trillions not billions' was continuously used to indicate the amount of funds needed to reach the Sustainable Development Goals. Significantly curtailing illicit flows is central to that effort," he added.

Even though Sustainable Development Goals (SDGs) required countries to significantly reduce illicit financial flows by 2030, the international community has not yet agreed on goal indicators, the technical measurements to provide baselines and track progress made on underlying targets and subsequently the overall SDGs.

The study is called 'Illicit Financial Flows from Developing Countries: 2004-2013', and through its report, GFI has recommended world leaders to focus on curbing opacity in the global financial system, so that these outflows can be restricted.

To do so, public registries of verified beneficial ownership information should be established by governments. These registries need to be put on all legal entities and all banks should know the true beneficial owner(s) of all the accounts that are opened with them.

Multinational companies should be made to publicly disclose their revenues, profits, losses, sales, taxes paid, subsidiaries and staff levels on a country-by- country basis, and all countries should actively participate in the worldwide movement towards the automatic exchange of tax information as endorsed by the OECD and the G20.
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