Logo of Phnom Penh Post newspaper Phnom Penh Post - Illicit funds a burden for developing world

Illicit funds a burden for developing world

Illicit funds a burden for developing world

At least $400 million flowed out of Cambodia illicitly from 2003 to 2012, according to a new report.

Global Financial Integrity’s (GFI) Illicit Financial Flows study, published December 16, found that during the 10-year period developing countries collectively lost $6.6 trillion to illicit outflows – a form of capital flight the US-based organisation argues entrenches poverty.

“The $991.2 billion that flowed illicitly out of developing countries in 2012 was greater than the combined total of foreign direct investment (FDI) and net official development assistance (ODA), which these economies received that year,” the study states.

Illicit funds encompass a broad range of illegal transactions, from importers evading customs duties to public officials stowing away money in the West through shell companies.

According to GFI, About 55 per cent of the illicit transactions end up in developed countries and 45 per cent in offshore financial centres such as the Cayman Islands.

Three Southeast Asian nations – Malaysia, Indonesia, and Thailand – made GFI’s top 10 list of countries, which lost the most per year on average. However, Cambodia ranked 140th out of 145 countries, losing an average of only $40 million per year.

The $40 million per year only came from “Hot Money Outflows”, or the discrepancy in the county’s overall balance of payments as measured by the International Monetary Fund.

Transparency International executive director Preap Kol said the low figure was due to the small size of Cambodia’s economy compared with its regional neighbours, and a lack of understanding of where the Kingdom’s illicit moneys – including funds acquired through corruption – actually end up.

“Most of those [people who move money illicitly] will keep it in a different country to ensure their privacy,” he said.

“But it’s difficult to estimate the amounts transferred because there’s no proper system of records in Cambodia.”

MOST VIEWED

  • Hun Sen ready to ‘break record’, says Rainsy lost

    Caretaker prime minister Hun Sen used a meeting with 18,400 factory workers on Wednesday to predict that he would beat the record for being the world’s longest-serving non-royal leader. He also used the platform to slam political opponent Sam Rainsy who he said had lost

  • Sihanoukville land prices skyrocketing amid breakneck development

    Sihanoukville, the Kingdom’s most famous beach destination for tourists, is seemingly becoming a paradise for Chinese investors as well. The huge influx of Chinese investors has caused property values to rise, especially the price of land, which has nearly doubled in some places near

  • US names new ambassador to Cambodia

    US President Donald Trump on Friday appointed W Patrick Murphy as the new US Ambassador to Cambodia, replacing incumbent William A Heidt. A press release posted on the White House’s website said nominee W Patrick Murphy is currently acting principal deputy assistant secretary at

  • Kingdom is at a crossroads between East, West after poll

    It was dubbed a success by caretaker prime minister Hun Sen after the electoral victory of his Cambodian People’s Party (CPP), which is poised to take all seats in the National Assembly. But the July 29 national election has not been positively looked at by