Malaysia ranks fourth in illicit financial outflows 2002-2011


Malaysia ranks fourth in the list of the top 25 countries with the highest measured cumulative illicit financial outflows from 2002 to 2011, according to Global Financial Integrity. Over the last decade, some RM1.2 trillion flowed out of the country. Where is all that money being parked?

illicit outflows 2002-2011

1. China: US$1.08tn
2. Russia: US$880.96bn
3. Mexico: US$461.86bn
4. Malaysia: US$370.38bn
5. India: US$343.93bn
6. Saudi Arabia: US$266.43bn
7. Brazil: US$192.69bn
8. Indonesia: US$181.83bn
9. Iraq: US$78.79bn1
10. Nigeria: US$142.27bn
11. Thailand: US$140.88bn
12. United Arab Emirates: US$114.64bn2
13. South Africa: US$100.73bn
14. Philippines: US$88.87bn
15. Costa Rica: US$80.65bn
16. Belarus: US$75.09bn
17. Qatar: US$62.82bn2
18. Poland: US$49.39bn
19. Serbia: US$49.37bn
20. Chile: US$45.20bn
21. Paraguay: US$40.12bn
22. Venezuela: US$38.97bn
23. Brunei: US$38.37bn2
24. Panama: US$38.09bn
25. Turkey: US$37.28bn

Global Financial Integrity measures illicit outflows as follows:

Illicit financial flows are cross-border transfers of funds that are illegally earned, transferred, or utilized. These kinds of illegal transactions range from corrupt public officials transferring kickbacks offshore, to tax evasion by commercial entities, to the laundered proceeds of transnational crime.

Illicit Financial Flows from Developing Countries 2002-2011 does not measure all illicit financial flows. It uses two primary methodologies to estimate two different methods for illegally transferring funds across borders.

The first, Hot Money Narrow (HMN), looks at money that has disappeared from the balance of payments. GFI infers that is likely to represent kickbacks, bribery, and other forms of unrecorded wire transactions. Countries that are rich in natural resources, like oil, tend to have higher HMN numbers relative to others. HMN accounts for about 20.3% of illicit financial flows estimated in this report.

The second, Gross Excluding Reversals (GER), looks at trade misinvoicing, a common method used by commercial entities for the cross-border movement of illegal money. Exporters and importers manipulate trade invoices to over-represent or under-represent the value of the goods they are shipping. Often, this will involve re-invoicing the goods through a secrecy jurisdiction. The result is that a certain sum of money disappears on one side of the border—either from the importer or exporter. We detect this by comparing what a country says it is exporting, and what the rest of the world says it imports from that country, and vice versa.

Certain types of trade misinvoicing are used for different purposes. Drug cartels and terrorist networks have been known to use it to launder money. Importers and exporters use it to evade customs duties. Other tax evaders, criminals and corrupt public officials in developing countries use it to hide wealth or ill-gotten gains. GFI’s methodology is unable to distinguish between the different sources of trade mispricing.

Incidentally, the US is the second easiest country in which to open a money laundering firm, according to a Guardian report.

The US Department of Justice acknowledged last year that anonymous shell companies are the number one tool used by criminals to launder their illicit funds. Remarkably, researchers at Brigham Young University, the University of Texas, and Griffith University found that the US was the second easiest place in the world after Kenya to open one of these phantom firms. These disguised corporate entities have been used to funnel weapons to terrorists and drug lords, they’ve been used to plunder corrupt funds from some of the poorest countries in the world, and they’ve been used to defraud Medicare—the national health insurer for elderly Americans—of billions of dollars.

The answer to this problem is making it mandatory for all companies formed in the US to disclose the true, human “beneficial owners” of the company in a central public registry that can be searched by law enforcement, investors, and due diligence officers.

Is the MACC investigating these ridiculously high illicit outflows?

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1 Jan 2014 11.21am

But RM110 million could possibly find itself to NYC for the purchase of an apartment?

Rich Daddy
Rich Daddy
30 Dec 2013 7.40pm

Cannot believe such list, bro. Where is the USA ??? Suddenly the USA is so clean 🙂

Don Anamalai
Don Anamalai
31 Dec 2013 11.12am
Reply to  Rich Daddy

USA’s quantitative easing -> printing more US dollars -> inflow of US dollars to Bursa Malaysia -> rise in KLSE!!! Malaysian investors make $$$!

30 Dec 2013 6.35pm

Most $$$ transferred belong to Political Trader.One former Selangor MB don’t understand English and now Pas member. Sudah taubat?

rajraman. The foreign workers transfers to feed their family with their hard earn $$$ but Political Trader and their cronies transferred for their generation after generation from our $$$.

30 Dec 2013 4.32pm

However, Malaysia is rank low here:

Based on the mean score for 2012, Malaysia is still placed in the bottom third, ranking 52 out of 65 countries, and 55 out of 74 countries in the Programme for International Student Assessment (Pisa) 2012, as released by the Organisation for Economic Cooperation and Development (OECD),

30 Dec 2013 4.10pm

Anil, A cybertrooper has just moved in. But truth must be told whether its BN or PR. It seem both sides are afraid of being criticized or the truth being told.

Legal suit is Guan Eng’s New Year gift to vocal critic
Susan Loone | 2:13PM Dec 30, 2013 | 6
The CM is initiating legal action against Chant Awareness adviser Jimmy Lim, news portal FMT and its reporter over its Dec 6 report.

Aun Chua Kong?
Aun Chua Kong?
30 Dec 2013 6.24pm
Reply to  Yang

With many rich developers behind his back, why can’t he sue any feared critic at a moment notice?
Penang Island will soon sink to the lows of low human rights to keep mouths shut.

1 Jan 2014 6.29pm
Reply to  Aun Chua Kong?

Mai Luan Kong (Don’t anyhow say!)

najib manaukau
30 Dec 2013 4.07pm

For once, at least, Malaysia is ranked high in the list, it is even higher than Saudi Arabia !
In addition to the million of non Malays professionals who immigrated to other countries. Malaysia is now also ranked high in the list of illicit outflow of funds other the professional immigrants to other countries. The regime can go round the world with their Talent Corp to beg the immigrated to return to serve the country but how and who can they ask to go round begging for the funds to be returned !

30 Dec 2013 4.01pm

How many foreign accounts would you need to transfer RM10 or 100 millions. Its virtually impossible to do that. Just like that 40,000 bangle voters that was spiced up during the GE which every one now knows its not true

Smart GrandDaddy
Smart GrandDaddy
30 Dec 2013 3.04pm

For such a relatively smaller country, rank #4 is truly alarming !

Bank Negara has failed to curb such illegal activities ?

In China, whoever commits such crime will be punished severely to deter such haram activity !

We hope Jakim comes out with guidelines to punish the offenders !

30 Dec 2013 2.36pm

Could this be attributed to the high number of foreign workers remitting money back to families at home? How is illicit defined?

30 Dec 2013 2.43pm
Reply to  Saheba

Or using false foreign worker’s account as a means to remit ill-gotten money?
Anything is possible, as it was reported that high ranking police personnel could also be involved in such syndicate as reported on the Malay Mail: