India 4th largest in Asia for illicit money flows: Report

India is Asia's fourth largest exporter of illicit capital with an estimated outflow of a whopping US$104 billion between 2000 and 2008, according to a US-based think tank which ranks China as the number one source of illegal money.

In its latest report on illicit money, Global Financial Integrity (GFI), a Washington-based think tank, said Asia continues to produce the largest portion of illicit flows, almost half-trillion dollars in 2008 alone.

According to figures of illicit flow of money released by this think tank, China tops the list and is several times that of India.

Between 2000 to 2008, GFI estimated that the outflow of illicit money from China was US$2.2 trillion. Malaysia follows a distant second with USD 291 billion.

Philippines is ranked third with US$109 billion, while both Indonesia and India are ranked fourth with US$ 104 billion each, says the report 'Illicit Financial Flows from Developing Countries: 2000-2009', released today.

On an average these five countries account for 96.5% of total illicit flows from Asia and 44.9% of flows out of all developing countries.

However, it said that these (Asia region compared to total developing world) shares have been declining; the top five Asian countries transferred 36.9% of illicit flows from all developing countries in 2008, down from 53.3% in 2000.

The report ranks countries according to magnitude of outflows with China ranking at the top followed by Russia (US$427 billion), Mexico (US$416 billion), Saudi Arabia (US$302 billion) and Malaysia (US$291 billion).

"India, which was the fifth largest exporter of illicit capital in the 2008 IFF report is now ranked 15th among developing countries," the report said. 

The think tank says there are three main reasons why average illicit flows from India slipped in the country rankings.

The first reason is - illicit outflows from several oil producers such as the United Arab Emirates, Kuwait, Venezuela, Qatar, Nigeria, Kazakhstan, and Indonesia (in that order) now outpace those from India.

Secondly, there were substantial inflows of illicit capital into India (mostly through the balance of payments but also through trade mispricing) that were set to zero under the gross outflows method.

And finally, the United Arab Emirates and Qatar, which have the sixth and ninth highest average illicit outflows respectively, were excluded from the 2008 GFF Report because of lack of balance of payments and debt data, it explained.

According to the report, bribery, theft, kickbacks, and tax evasion were the greatest conduit for the illicit financial flows from the major exporters of oil such as Kuwait, Nigeria, Qatar, Russia, Saudi Arabia, the United Arab Emirates, and Venezuela.

Oil exporting countries, like Russia, the United Arab Emirates, Kuwait, and Nigeria, are becoming more important as sources of illicit capital, it said.

"Every year developing countries are losing ten times the amount of Official Development Assistance (ODA) remitted for poverty alleviation and economic development," said GFI director Raymond Baker.