Saturday , 15 June 2024

“Hot Money” Growing at 6.5% Annually – Here are the Culprits

Every year, roughly $1 trillion in “hot money” flows illegally out of developing and emerging economies due to crime, corruption, and tax evasion growing at an average rate of 6.5% annually (and at an 8.6% clip in Asia). China, Russia, Mexico and India lead the way as depicted in the following infographic.

How does this “hot” money leave these countries?

Global Financial Integrity, a research and advisory organization based in Washington, DC, has calculated that 83% of illicit financial flows are due to what it calls “trade misinvoicing” which is the misstating of the value or volume of an export or import on a customs invoice.

Misinvoicing is made possible by the fact that trading partners write their own trade documents, or arrange to have the documents prepared in a third country (typically a tax haven), a method known as re-invoicing. This fraudulent manipulation of the price, quantity, or quality of a good or service on an invoice allows criminals, corrupt government officials, and commercial tax evaders to shift vast amounts of money across international borders quickly, easily, and nearly always undetected.

The original article/infographic comes from and is presented here by the editorial team of (Your Key to Making Money!) and the FREE Market Intelligence Report newsletter (see sample hereregister here) in a slightly edited ([ ]) and abridged (…) format to provide a fast and easy read.]