Nepal records illegal financial outflow of $ 5.67 billion in 10 years

Kathmandu December 11- Nepal is the fourth largest country in South Asia to witness illegal movements of money or capital, says a latest global report. Nepal recorded illegal financial outflows of $5.67 billion in between 2004 and 2013, or average of $567 million per year, shows the latest report, ‘Illicit Financial Flows from Developing Countries: 2004-2013’, released by Global Financial Integrity (GFI), a Washington, DC-based non- profit research and advisory organisation.

India ranked top in the South Asian Illicit Financial Flows Index, reporting illegal outflows of $510.29 billion in between 2004 and 2013, followed by Bangladesh, which recorded illicit outflows of $55.88 billion in the same period.

Globally, $7.85 trillion worth of illicit financial flows were reported in between 2004 and 2013, the report says.

The GFI measures illicit financial outflows using two sources: deliberate trade misinvoicing — import or export under-invoicing or over-invoicing — and leakages in the balance of payments.

In Nepal, of the total money that flowed out in between 2004 and 2013, $5.39 billion, or 95 per cent, was related to import under-invoicing, says the report.

This means many importers are deluding banks to issue payment instruments, such as letters of credit, of bigger amount, but are not making all the payment to parties overseas. Source: THT