How Chinese Oligarchs Used Fake Trade Invoices to Launder Almost $1 Trillion Globally

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Our estimates show that the developing world lost US$991.2 billion in illicit financial flows in 2012, over ten times the amount of official development aid received by these countries in that year, and greater than the amount of net foreign direct investment received. From 2003 – 2012, US$6.6 trillion left developing country economies illicitly.

Illicit outflows from developing countries increased at a trend rate of 9.4 percent per annum in real terms over the time period from 2003 to 2012. Though growth rates of IFFs tended to be higher before the financial crisis, their volume continues to climb. Over this time period, illicit financial flows were equivalent to 3.9 percent of developing world GDP on average.

Save for a brief slowdown during the financial crisis, illicit financial flows have been allowed to grow unchecked over the past decade. In 2012, illicit outflows reached a staggering new peak of US$991 billion.

– From the Global Financial Integrity Report: Illicit Financial Flows from Developing Countries: 2003-2012

While the U.S. government loves to target and imprison small time so-called “money launderers” such Bitcoin pioneer Charlie Shrem, the real money launderers, the ones who help drug cartels and pump criminally sourced money into foreign real estate thus pricing out domestic populations worldwide, face no consequences whatsoever. I’ve explored this hypocrisy on many occasions, most recently in the post, Some Money Launderers are More Equal than Others Part 2 – CEO of BitInstant is Arrested. Here’s an excerpt:

Last May, I wrote an article titled: Some Money Launderers are “More Equal” than Others, which likened the U.S. government to the pigs that ruled the roost in George Orwell’s classic novel Animal Farm. In that article, I decided to compare the way the “authorities” used money laundering laws against Liberty Reserve, versus the way they tip-toed around massive money laundering for Mexican drug cartels that HSBC engaged in. Since I wrote that article, JP Morgan has been fined tens of billions of dollars for a cornucopia of criminal activities. Meanwhile, we have yet to see a single executive arrested or put behind bars. Why?

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