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Zhemukhova M.A., Surma I.V. Peculiarities of functioning of illicit financial flows in developing countries

Published in journal "National Security / nota bene", 2015-5 in rubric "Economical support of national security", pages 738-744.

Resume: The subject of this research is the illicit financial flows that emerge in developing countries as a result of money laundering, tax evasion and bribery.  The author underlines that the main international standards on the fight against illicit financial flows are focused on the following strategic areas: money laundering, tax evasion, corruption, reimbursement of the illegally transferred funds. The author thoroughly describes that the illegal financial outflow forms by the means of two sources:1) import-export scams; 2) outflow of speculative capital. The statistics demonstrated in this article shows that Asian developing countries accrue almost half of the total amount of illegally transferred assets.   The author analyzes the reports of such non-governmental organizations as: Tax Justice Network (report “The Price of Offshore Revisited”) and International Financial Integrity (report “Global Illicit Flows from Developing Countries over the period of 2003-2012), report of the Economic Cooperation Organization (ECO) “Illicit Financial Flows from Developing Countries. Assessment of Countermeasures”. The main conclusion of the conducted research is the urgent need for developing countries to reevaluate and abandon agreements on avoiding double taxation; accepting the position on the auto exchange of tax information, requirements of transnational corporations to publically reveal their data about each country on incomes, profit, losses, sales, paid taxes, and personnel capacity.

Keywords: black economy, developing countries, direct investment, portfolio investment, international corruption, tax evasion, money laundering, illicit financial flows, transnational corporation , financial embezzlement

DOI: 10.7256/2073-8560.2015.5.16262

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Bibliography:
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