Bangladesh lost $68.3b to trade-related illicit flows from 2013 to 2022: GFI

Between 2013 and 2022, Bangladesh lost an estimated $68.3 billion through trade-related illicit financial flows, according to a report by Global Financial Integrity (GFI).

The report published on Thursday (March 26) showed that Bangladesh is among the top ten developing Asian economies with significant trade discrepancies.

On an annual basis, the country lost about $6.8 billion, equivalent to 16 per cent of its global trade, primarily due to trade misinvoicing.

Of this total, roughly $32.8 billion flowed to advanced economies, according to the study that examined data from 24 developing Asian countries across South, East, and Southeast Asia.

The report noted that Bangladesh faced issues with trade-based money laundering through over-invoiced imports of capital machinery (subsidised loans diverted abroad), while Sri Lanka saw trade fraud contributing to its foreign exchange crises (over-invoicing fuel imports to funnel money out during times of lax oversight).

Countries with larger economies and greater trade volumes experienced the highest illicit outflows, with China alone registering $6.96 trillion in cumulative trade gaps over the decade, followed by Thailand ($1.18 trillion) and India ($1.06 trillion), it said.

Such money laundering poses a major obstacle to development and good governance, the report said, noting that it weakens domestic resource mobilisation, reduces tax revenue, and shrinks funds needed for public services and infrastructure investment.

To curb illicit financial flows in Developing Asia, the Washington-based think tank GFI recommended strengthening customs enforcement, leveraging regional agreements for data sharing and joint enforcement, enhancing transparency in free trade zones and transshipment hubs, promoting international collaboration, and updating legal frameworks.