draining development.pdf - Khazar University

502 Draining Development?Notes1. See “Final Report from the Task Force on the Development Impact of IllicitFinancial Flows” (2008, 4), at http://www.leadinggroup.org/IMG/pdf_Final_report_Task_Force_EN.pdf.2. Thanks goes to Michael Levi for this point.3. See FATF, Paris, http://www.fatf-gafi.org/. Though FATF has only 36 members,it covers a majority of countries through counterparts, associates, and affiliatessuch as the FATF-Style Regional Bodies. For example, the Egmont Group ofFinancial Investigative Units lists approximately 120 member units throughoutthe world; see http://www.egmontgroup.org/about/list-of-members.4. AML laws require that the funds be generated by specified predicate offenses,that is, underlying crimes. Money laundering itself is not a predicate offense.5. Though most of the attention is placed on the collective uncertainty about thesize of the outflows, it is also worth noting that there are no global and fewnational estimates of the total assets recovered.6. Norway, Minister of the Environment and International Development, 2009,Tax Havens and Development: Status, Analyses and Measures, Oslo: GovernmentCommission on Capital Flight from Poor Countries, http://www.regjeringen.no/upload/UD/Vedlegg/Utvikling/tax_report.pdf.7. For example, see Gordy and Howells (2004); Saccomanni (2008); “All’s Fair: TheCrisis and Fair-Value Accounting,” Economist, September 18, 2008, http://www.economist.com/node/12274096.8. The focus of the Eden and Leite chapters is the use of TPM to transfer excessfirm profits. However, TPM can also be used to assist other parties who wish tomove illicit money out of a country; in that case, side payments may be made inthe destination country.9. Leite provides an example in chapter 8.10. TPM involving only two developing nations is rare.11. This is a conjecture; systematic estimates of the size of other illegal markets havenot been made.12. Rich countries can serve as transit and producing countries. The Netherlandswas, at one time, perhaps the major producer of Ecstasy. The Netherlands andSpain are the entry points for much of the cocaine coming to Europe, as indicatedby seizures (EMCDDA 2010). Paoli, Greenfield, and Reuter (2009) presentdata on the world heroin market that support these statements about that drug.Cocaine use is concentrated in North America and Western Europe as measuredby volume and expenditures.13. The price at which a kilogram of cocaine is exported from Colombia is aboutUS$2,000. At its first sale in the United States, it might attract US$15,000–US$20,000 (Kilmer and Reuter 2009). On the prices of coyote services at theborder, see Massey and Durand (2003).14. The United Nations System of National Accounts includes earnings from illegalmarkets in national income accounts (see OECD 2002). However, little effort is