Global Financial Integrity (GFI) launches its new database tool—GFTrade—with real-time price analyses to measure trade misinvoicing risks for 80,000 goods categories. Trade misinvoicing accounts for hundreds of billions in illicit financial flows from developing countries, and in curtailing these outflows, GFTrade would generate millions of dollars in additional domestic revenue.
“GFTrade is a game-changer for development,” commented GFI Managing Director Tom Cardamone. “Developing economies lost at least US$875 billion due to trade misinvoicing in 2013. That’s US$875 billion that wasn’t taxed accurately or directed back into the domestic economy for investment and providing government and social services.”
Trade misinvoicing is a method for moving money illicitly across borders that involves deliberately misreporting the value of a commercial transaction on an invoice submitted to customs. There are four primary reasons why an individual or business misinvoices trade: money laundering, directly evading taxes and customs duties, (fraudulently) claiming tax incentives, and dodging capital controls.
GFTrade is a cloud-based dataset and interface with world market pricing for 80,000 Harmonized System (HS) codes and trade data from 30 countries, which conducted US$7.5 trillion in trade in 2015, including seven of the world’s ten-largest trade economies (by volume) are included in the dataset: the United States, Germany, Japan, France, the United Kingdom, the Netherlands, and Italy. The U.S. data alone represents approximately 10 million individual trades every month. Users, be they customs officers, other government investigators, or private sector trade facilitators, harness this huge database by simply entering in an HS code or a description and the quantity and price of that same good as recorded on the invoice. GFTrade displays in text and graphs if that invoice value veers significantly—over or under—from current prices and from the last 12 recorded months. With this information the user is empowered to see whether that invoice warrants investigation.
“It’s staggering by how much the value on some invoices is being manipulated up or down: We’ve seen examples of bananas being exported from a Central American country at one-tenth the world market price,” remarked GFI President Raymond Baker. “Once more and more countries start using GFTrade, businesses and individuals are going to realize that they can’t get away with that sort of behavior anymore. This is exactly why GFI has always advocated transparency as the key to addressing systemic financial illegality and secrecy.”
Global Financial Integrity is launching GFTrade at a joint event with the World Bank’s Integrity Vice Presidency on November 9th from 9:30am-12:00pm at the World Bank Headquarters in Washington, DC. Tom Cardamone will demonstrate GFTrade as part of a panel on “Progressing International and National Responses to Illicit Financial Flows” from 10:30-11:45am. To register for this event or to learn more, please visit our website.