KUALA LUMPUR, Jan 29 — Between US$22.9 billion (RM94.22 billion) and US$33.7 billion (RM138.66 billion) was illegally siphoned out of Malaysia from 2006 until 2015, according to the latest 10-year report by US think tank Global Financial Integrity (GFI).
The two different sums were based on two different data used by GFI in its report titled Illicit Financial Flows to and from 148 Developing Countries: 2006-2015 released yesterday. The first was according to the United Nations while the higher amount was based on the International Monetary Fund.
South-east Asia’s third largest economy was in the top 30 out of 148 nations — based on US dollar value — that saw the illegal movement of money out of their respective countries, which GFI attributed to “trade misinvoicing”.
The think tank described trade misinvoicing as a form of money laundering made possible when trade partners deliberately misstate the value or volume of an export or import in a Customs invoice to dodge tax and quickly shift huge amounts of money across borders, adding that the fraud is “nearly always undetected”, partially due to “corrupt government officials”.
Malaysia in particular was afflicted with export under-invoicing, which GFI said formed a significant 25.6 per cent of total trade.
To curb such illicit financial flows, GFI recommended governments and other international regulators set up public registries of verified beneficial ownership information on all legal entities.
It also suggested governments compel multinational companies to publicly disclose their revenues, profits, losses, sales, taxes paid, subsidiaries, and staff levels on a country-by-country basis.
To cope with trade misinvoicing in particular, GFI said governments should provide their Customs agencies with better equipment and training to detect intentional misinvoicing of trade transactions, particularly through access to real-time world market pricing information at a detailed commodity level.
In its previous 10-year report, GFI said Malaysia lost up to about US$431 billion (RM1.8 trillion) in illegal flow of money between 2005 and 2014.
