China and Russia are leaders in Illicit Financial Flows

The Illicit Financial Flows from Developing Countries: 2003-2012 report reaffirms the $1 trillion estimate of unrecorded money shifting yearly out of emerging market and developing countries.

They use the World Bank Residual Method and International Monetary Fund Direction of Trade Statistics. Both are dependent on data filed by governments with these institutions. Global Financial Integrity (GFI) did not invent the methodology nor create the statistics. Both had been around for decades. What GFI did do was apply these existing analytical methodologies to data from the whole of developing countries. In the intervening years we have made two adjustments to our methodology, both tending to produce more conservative estimates.

Today our data are drawn entirely from IMF balance of payments and IMF international trade statistics. These statistics and their derivatives are used every day by international institutions, governments, corporations, banks, and individuals making millions of decisions on investments, loans, interest rates, exchange rates, and more. They are, in short, the statistics on which the economic and financial worlds work, influencing as well political and security concerns for all nations.

Russia has said it has about $400 billion in reserves but a lot of that money might be accounting tricks or has been already been embezzled.

China has about $4 trillion in reserves. China also has a hidden economy of about $1 trillion in GDP each year out of its total 10-12 trillion economy. About 12% of China’s economy is hidden wealth and understated income. A lot of China’s outflow is from the hidden economy.