A/HRC/22/42 B. Countries of origin 17. Studies indicate that most illicit financial outflows are from developing countries.23 According to GFI estimates, 61.2 per cent of all illicit financial flows from developing countries come from Asia, mostly due to massive outflows from China and India, the largest developing economies in the region. Illicit financial flows related to commercial transfer mispricing and trade mis-invoicing are estimated to account for over 90 per cent of illicit financial flows from this region. Latin America and the Caribbean follow at 15.6 per cent, with the Middle East and North Africa at 9.9 per cent. Developing Europe follows with 7 per cent of illicit flows, while Africa accounts for 6.3 per cent of all illicit outflows. 24 18. According to GFI, the following countries accounted for 76 per cent of all illicit financial outflows worldwide during the period 2001–2010: China, Mexico, Malaysia, Saudi Arabia, the Russian Federation, the Philippines, Nigeria, India, Indonesia and the United Arab Emirates (cited in order of size of estimated illicit outflows). 25 19. While at first glance illicit financial outflows from least developed countries (LDCs) may account only for a small portion of all illicit financial outflows worldwide, they have a particularly negative impact on social development and the realization of social, economic and cultural rights in these countries. Given that LDCs account for less than 2 per cent of world gross domestic product (GDP) and only about 1 per cent of global trade in goods, 26 illicit financial flows from these countries are in relative terms, compared to their small economies, very large. The United Nations Development Programme has estimated that illicit flows from LDCs amounted, on average, to 4.8 per cent of their GDP over the period 1990–2008. This means, that for every dollar received in ODA, on average, 60 cents exit these countries in illicit flows. In eleven LDCs, capital loss related to illicit financial flows was estimated to have exceeded the total ODA received. The total amount of estimated illicit financial flows for 39 LDCs for which sufficient data was available, amounted to US$246 billion, surpassing debt service payments of US$164 billion and thus constituting the principal contributing factor to the net resource transfer from these countries to the rest of the world, estimated at US$197 billion (all data for the period 1990–2008).27 C. Countries of destination 20. There is a lack of comprehensive information pertaining to where illicit funds are held. While in some cases significant funds may be returned by corrupt or criminal actors and invested in private assets, such as land and luxury estates in the countries of origin, most funds remain offshore.28 Usually illicit financial flows are laundered through a 23 24 25 26 27 28 Trade mis-invoicing was the dominant method of transferring illicit funds from all regions except the Middle East and North Africa, where it accounted for 37 per cent of total outflows during the period 2001-2010. See Kar and Freitas, Illicit Financial Flows from Developing Countries, p. 15. Ibid., pp. 14, j and k. Ibid., p. 16. Office of the High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States (UN-OHRLLS), “Least developed countries: About LDCs”. Available from www.unohrlls.org/en/ldc/25/. United Nations Development Programme, Illicit Financial Flows from Least Developed Countries: 1990–2008, Discussion Paper (New York, 2011), p. 14. For a discussion of the negative impact of returned illicit funds on land concentration, see, e.g., Francisco Thoumi and Marcela Anzola, “Illicit Capital Flows and Money Laundering in Colombia”, in Peter Reuter (ed.) Draining Development? Controlling Flows of Illicit Funds from Developing Countries (Washington, D.C., World Bank, 2012) pp. 145–170. 9