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Visualizing The World's "Hot" Money
Every year, roughly $1 trillion flows illegally out of developing and emerging economies due to crime, corruption, and tax evasion. This amount is more than these countries receive in foreign direct investment and foreign aid combined.
This week, a new report was released that highlights the latest data available on this “hot” money. Assembled by Global Financial Integrity, a research and advisory organization based in Washington, DC, the report details illicit financial flows of money from developing countries using the latest information available, which is up until the end of 2013.
Courtesy of: Visual Capitalist
The cumulative amount of this “hot money” coming out of developing countries totaled just over $7.8 trillion between 2004 and 2013. On an annual basis, it breached the $1 trillion mark each of the last three years of data available, which is good for a growth rate of 6.5% rate annually.
In Asia, illicit financial outflows are growing even quicker at an 8.6% clip. It’s also on the continent that five of the ten largest source economies for these flows can be found, including the largest offender, which is Mainland China.
How does this “hot” money leave these countries? Global Financial Integrity has calculated that 83% of illicit financial flows are due to what it calls “trade misinvoicing”.
It’s defined as the following:
The misinvoicing of trade is accomplished by misstating the value or volume of an export or import on a customs invoice. Trade misinvoicing is a form of trade-based money laundering 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. 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.
Trade misinvoicing accounted for an average of $654.7 billion per year of lost trade in developing markets over the data set covered by the report.
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and i thought 'Miss Invoicing' was a wall street stripper
How many of them are gun free zones?
Goldman Sachs buzz-acronym "BRICS" are five of the largest exporters of "hot money".
It amuses me to no end how so many buy the idea that the BRICS are gonna take over the world.
All five are dumps where most ZH-ers would NOT want to live. Trust me on that.
All five may be dumps but why would I ever want to trust you?
6 signals for an impending bear market:
http://www.planbeconomics.com/2015/12/6-signals-for-impending-bear-marke...
What the fuck is "illicit" money? Savings that weren't looted away?
Better definitions would have "black" money correspond to any government/public spending, declared capital and proceeds from violent crime (i.e. money that is acquired through or enables violence) and honest money to all the undeclared savings, underground economy/trade proceeds and non-institutional drug money.
BRICS currency is backed by their infrastructure, labor force, resources, etc. The bulk of the fed-notes value comes from it having been the established medium of exchange. They are working on that on the oil and SWIFT fronts.
Where's Turkey Run park in 'Langley' on that map?
Also, where are the numbers for the first world countries? Or do they not have "illicit" money?
Macon Richardson
Good point. I should not have written that last sentence.
Indeed, be careful whom you trust.
the most of China money leaves through HK. do you think HK is a dump ?
did you ever leave your small town ?
I found Hong Kong rather nice some 20 years ago, Beijing not so much.
We just came back from India.
So, yes, I have been to four of those BRICS, and am not impressed. Sorry.
Feel free to tell me more though. Especially about your travels. ;)
She is.
She does the duo dame show with Miss Representation.
On weekends featuring Miss Adventure and Miss Demenor.
I believe one of the only things keeping the US economy afloat is the marijuana trade. It went legal in a few NW States, opening up a floodgate of the crop. It is being sold on the streets of Portland Oregon like Starbucks coffee, but Nothern California is still producing tens of billions in dollars of the weed.
The product moves east and south now, giving an income to anyone involved. Grass alone is producing maybe $100B worth per anum. What else in this economy is doing that?
Oil was, until the price dropped. Now wildcatters are bankrupt. Tech? They aren't making the money they say they do, it's all accounting gimmicks. Wall Street is skimming the cream off the milk, oh, and the milk went rotten years ago.
Marijuana is the capstone to the economy.
SG! Weird, ain't it?
The way things are changing, prostitution will be near second.
Fighting Terrorism, Tax Evasion, Bank Secrecy and Dirty Money since 2006.
Perhaps this is a worthy organization, but I wouldn't bet on it; "useful" might be a better discriptor.
http://www.gfintegrity.org/
The alternative is automatic exchange of financial information, and it is exactly what it sounds like—countries automatically exchange information on bank accounts, transactions, and financial flows with each other on a periodic basis, enabling law enforcement and tax authorities to follow up on any leads they may have. GFI has advocated for many years that countries should establish and participate in systems whereby they exchange as much information with each other as is feasible.
One Bank to Rule Them All
The "hot money" is at the FED.
End Central Banking now.
As a (retired) tax-haven professional in three countries, and a former Manager of the Cayman Islands Chamber of Commerce, I must caution against the term "mis-invoicing" - with or without the hyphen...More properly, it's re-invoicing, and no more illicit than the procedure by which any trader buys goods at one price and sells them at another.
When a corporate buyer is owned by the same people as own the seller, their transaction may raise an eyebrow or two, but usually it would be permitted by the published taxation laws of all the relevant companies, as those laws are interpreted by both private-sector lawyers and the tax authorities. With transactions of that kind, it is beneficial for the owners if the tax-rates are different in the two jurisdictions. Well, of course; but that situation is always - always - allowed by the laws of those jurisdictions, whether they are developed or developing.
Over the years I have written several brief explanations of how "offshore" havens work. The one at the link below covers the basic-basics reasonably well.
http://barlowscayman.blogspot.com/2013/01/offshore-tax-havens-what-they-do.html
Interesting, and thank you! I saved the link for further reading. Can I assume that is your blog?
Ditto.
How much hot money US pumps out every year for the three golden reasons of "crime, corruption, and tax evasion" ?
We really need a hefty one-world government to put a stop to these activities.
Nice! Got my + 1.
Hillary has the hefty part covered.
one-world governement, one bank, one religion, one sex (or no sex, robots), one...
someone said "weird" above, and it does feel like that, when "we are one" deteriorated over(time) into more, variety of experiences, but then a smart evil one named anu...
we are heading into that rabbit hole, folks.
4get mis- re- (even un-) all part of the plan being excuted.
que sera sera...
on a mandane level, anyone remembers Sarbanes-Oxley (SOX, if you're into 3-letters) ?
And as SoulGlow mentioned above, Marijuana has great annual numbers. We are really heading to Brave New World/1984 territory.
Ein Reich! Ein Volk! Ein Fuehrer!
"Edwardo Savorin" owes me both the $2B and the "Stern letter" from Jon "wet start" McCaine.
Lois learner knows where I live, but it is a long walk. (1600 SAT)
So, you're saying that people want to keep what they earn and not support the parasitical and tyrannical activities of their local corrupt regimes.
Who'd a thunk it.
OT ALERT!
Four Waco bikers killed by same kind of rifle used by police
http://www.dailymail.co.uk/news/article-3356637/Four-Waco-bikers-killed-...
Just another ,gov massacre.
Nothing to see here. Move along now
Schwinns or Huffy s?
Oh gosh no,not Cannondales?
"Every year, roughly $1 trillion flows illegally out of developing and emerging economies due to crime, corruption, and tax evasion"
Yea, that would be banksterz, CIA and their drug running, NGO's and their child trafficking....... etc...
Might want to throw a few more zero's in there too.
Bob who runs the deli down the street and pockets $500 "illicit" dollars a week is not your worry or concern you stupid fuckkkerz.
No hot money in the USA Australia and Europe apperantly. Probably no money at all, hot or cold.
The Russian central bank every year publishes a report of how many billions of dollars have been stolen from our economy, and... does nothing, nothing at all to stop this.
There are good arguments to say that what people do with their own money is nothing to do with .gov.
But once again, we see banksters and corrupt corporate sector players colluding with corrupt individuals and assorted criminals - many inside .gov itself - to move ill-gotten gains to safer places out of reach of law enforcement in their own countries.
Banksters facilitate virtually every financial crime.
And Apple, Google, Amazon, Pfizer et. al. are not doing the exact same thing. Been doing it for years. USSA wrote the book on Transfer Pricing.
Just that when someone else does this its bad. Ohhh.
But why is missing from that map the "big player" US? Only 1 example here https://youtu.be/FfISZaCHJ_4
The original premise is flawed.
"Legal" vs. "Illegal".
The Trillion$ of US imports paid with counterfeit, err "fiat dollars" is "legal".
The billions in the marijuana trade are "illegal", but the big Pharma scams are "legal".
The billions extorted through the petrodollar are "legal". The aid, err "payoffs" to corrupt tyrannies and expansionist apartheid regimes are "legal" (e.g. Egypt, Israel, Saudi Arabia, Kiev, Colombia, etc.).
The billions paid to illegally attack Iraq, Syria, and Afghanistan are "legal".
Missing are the suicided farmers in India resultant from Monsanto "investments".
Missing are the backdoor bribes of global corporations and the Libor and other Goldman Sachs style financial scams.
etc. and etc.
On a serious note: this money represents excess savings from those countries and acts as a fiscal drag on those countries and the global economy. If that money had been consumed by the citizens of those countries instead of being parked in US dollar bank accounts in tax havens around the world, the whole world would be better off.
The way things are “supposed” to work
The way things are not “supposed” to work:
The only difference as I can tell is that the 2nd method results in the following:
All the oil majors re-invoice from tax havens.
Its been the favoured route of all energy multinationals.
Commodity trades is the other juggernaut via the huge trading conglomerates. Marc Rich made his name on that ticket.
Right. No "hot money" activity going on in the Middle East at all. Unbelievable a bit
An I was wondering who the fools are that keep buying over valued stocks in America......Now I know....And when they sell, the money is laundered lily white clean.......
Illicit by who's definition? Fraudulent trade invoices, so they were all audited and caught, huh.