Illicit Financial Flows Have Cost Cambodia Millions

The vast majority of Cambodia’s illicit financing comes from imports, such as through the Sihanoukville Autonomous Port (pictured), with estimated outflows at a negligible 1 percent.

A new report from US-based nonprofit Global Financial Integrity (GFI) has revealed that illicit financial flows ­– the illegal movement of money or capital from one country to another – has seen Cambodia lose at least $360 million in tax revenue between 2005 and 2014.

The GFI report found that as much as $45 billion in trade activity was not accounted for during the stated period. This is primarily attributed to the deliberate underreporting of the value of import and export goods.

“GFI continues to regard the magnitude of the illicit financial flows reported here, both low and high, as likely to be conservative,” the report said.

“Moreover, the data available for estimating bilateral trade discrepancies are restricted to merchandise trade alone, excluding trade in services and intangibles, surely a more attractive channel for trade misinvoicing than trade in goods.”

The report estimated that, between 2005 and 2014, illicit financial inflows made up between 17 to 39 percent of total trade, while in 2014 alone, it made up between 4 and 15 percent. GFI President Raymond Baker said this was a “staggering figure, underlining the enormous harm done to developing countries by illicit financial flows, however they are generated”.

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