Illegal capital outflows between 1994 and 2012 cost Russia's economy $1.3 trillion, according to a report by Global Financial Integrity (GFI), a Washington-based organization that researches shady international transactions.
An average of $70.6 billion was moved from Russia illegally each year over the period, or 8.3 percent on average of the country's gross domestic product, GFI said.
The largest movements of capital occurred after an oil boom in the 2000s ended in a global financial crash in 2008 and crushing recession in Russia in 2009. Over 2010-12, the annual illicit outflow accelerated to an average of $141 billion, the report said. In 2011, $174.2 billion — an amount equal to 9.9 percent of GDP — fled the country, according to GFI.
However, the outflows were matched by illegal transfers of money into Russia. Almost 2 trillion was funneled into the country between 1994 and 2012, the report said.
Eighty-seven percent of the illegal capital flight from Russia over the period of the study was due to the misinvoicing of trade — a way of funneling money across borders by deliberately misreporting the volume of exported goods. The received revenues then are accumulated in foreign accounts.
Apart from Russia, GFI studied developing nations India, Brazil, Mexico and the Philippines. The report noted that illegal money trafficking was one of the main obstacles to developing the economy and human rights in these countries.
Russia had the largest capital flight of the five countries. India saw $682 billion illegally moved from the country over a 64 year period, the report said, while illicit outflows from Mexico totaled $1.16 trillion over 42 years.
A Message from The Moscow Times:
Dear readers,
We are facing unprecedented challenges. Russia's Prosecutor General's Office has designated The Moscow Times as an "undesirable" organization, criminalizing our work and putting our staff at risk of prosecution. This follows our earlier unjust labeling as a "foreign agent."
These actions are direct attempts to silence independent journalism in Russia. The authorities claim our work "discredits the decisions of the Russian leadership." We see things differently: we strive to provide accurate, unbiased reporting on Russia.
We, the journalists of The Moscow Times, refuse to be silenced. But to continue our work, we need your help.
Your support, no matter how small, makes a world of difference. If you can, please support us monthly starting from just $2. It's quick to set up, and every contribution makes a significant impact.
By supporting The Moscow Times, you're defending open, independent journalism in the face of repression. Thank you for standing with us.
Remind me later.
