A/HRC/28/60 corruption. Commonly used methods to evade or avoid taxation include trade misinvoicing and transfer mispricing (A/HRC/22/42, paras. 6–7). Transfer mispricing refers to a practice of multinational companies. A subsidiary of a company avoids paying taxes in a relatively high-tax country by selling its products at a loss to a subsidiary in a low-tax country, which then sells the product to final customers at market price and yields the profit. While tax evasion, which breaks national tax laws, is illegal, many tax avoidance schemes comply with existing laws and regulations; or at least, go unchallenged in situations where tax authorities have scarce capacity and information. 6. Three main actors responsible for illicit financial flows may be identified: (a) private actors—individuals, domestic businesses and transnational corporations—committing for example tax and regulatory abuse and the related professional advisers on tax, legal matters and accounts; (b) public officeholders (both elected and employed); and (c) criminal groups. 7. Asset recovery is understood in the present report as the process by which the proceeds of corruption (as defined by articles 15–23 of the United Nations Convention against Corruption) are recovered and returned to a foreign jurisdiction. Asset recovery includes tracing of illicit assets, securing, freezing and returning them through a variety of legal avenues, including criminal confiscation and restitution, non-conviction-based confiscation, civil actions or actions involving the use of mutual legal assistance. B. Updated estimates 8. There is overwhelming consensus that the volume of illicit financial flows is significant, although estimates vary greatly and are debated. Since illicit financial flows are by definition hidden, it is inevitable that estimates will be subject to substantial uncertainty. Methodologies continue to develop, while data quality and availability remain problematic. In addition, the lack of transparency of financial intermediaries involved in financial transactions renders it difficult to calculate illicit financial flows with a high degree of certainty. However, as stated recently in an Organisation for Economic Co-operation and Development (OECD) report, there is consensus that they exceed aid flows and investment in volume4 and that the scale of the problem warrants international policy attention (A/HRC/22/42, para. 12). 9. For several years Global Financial Integrity (GFI) has produced regular estimates for illicit financial outflows, using data from international organizations for their statistics: They measure (a) outflows due to deliberate trade misinvoicing, by analysing imbalances in reported export and import values between a country and the world; and (b) outflows due to leakages in the balance of payments, also known as illicit hot money narrow outflows.5 While the data and methodology of these estimates have been subject to criticism,6 economists and international financial institutions have not to date published a comprehensive critique of GFI methodology. Alternative estimates point in the same direction: there is a huge loss owing to illicit financial flows and this annual loss is 4 5 6 4 OECD, Better Policies for Development 2014: Policy Coherence and Illicit Financial Flows 2014, p. 23. Dev Kar and Joseph Spanjers “Illicit financial flows from developing countries: 2003–2012” (Global Financial Integrity, Washington, D.C., December 2014), pp. 3–6. See for example James S. Henry, “The price of offshore revisited”, (Tax Justice Network, July 2012), pp. 37–39.