A/HRC/25/52 evasion through trade mis-invoicing and transfer mispricing, with trade mis-invoicing and transfer mispricing considered the prime drivers of illicit financial flows. 7. During the expert consultation mentioned above, a number of experts suggested that the issue of tackling the resource drain affecting many developing countries should be expanded beyond a narrow focus on corruption to incorporate illicit financial flows stemming from a variety of sources, including tax evasion. The Independent Expert agrees. Thus, for the purposes of the present report, the term “illicit funds” refers broadly to the proceeds of corruption, bribery, embezzlement, tax evasion and other crimes.2 II. Estimates of illicit financial flows: an update 8. Estimates of illicit financial flows are a matter of debate.3 Indeed, some have questioned the methods used to arrive at those estimates and the strong assumptions upon which they are based.4 While the Independent Expert acknowledges that it is difficult to calculate the amount of illicit financial flows with any degree of certainty (see A/HRC/22/42 and Corr.1, para. 12), he considers that estimates play an important role in confirming that the scale of the problem warrants international policy attention.5 Indeed, when viewed from the development perspective, the losses are substantial. 9. Recent estimates indicate that nominal illicit financial outflows from developing countries amounted to US$ 946.7 billion in 2011, up 13.7 per cent from $832.4 billion in 2010.6 That represented an increase in real terms of about 10.2 per cent per annum.7 Asia accounted for 39.6 per cent of total illicit outflows from developing countries. Developing Europe and the Western Hemisphere accounted for 21.5 and 19.6 per cent, respectively. Average outflows from Africa increased from 3.8 per cent in 2002, reaching a peak of 11.1 per cent in 2007, before falling to 7 per cent in 2011.8 It is notable, however, that although Africa has the smallest nominal share of regional outflows over the period 2002–2011, it 2 3 4 5 6 7 8 The term “illicit” should not be conflated with “criminal” or “illegal”, although in the majority of cases the funds in question will have been obtained in violation of domestic or international criminal laws. See United Nations Office on Drugs and Crime, “Estimating illicit financial flows resulting from drug trafficking and other transnational organized crimes”, research report (Vienna, 2011), p. 15. Available from www.unodc.org/documents/data-and-analysis/Studies/Illicit_financial_flows_2011_web.pdf. See also Organization for Economic Cooperation and Development (OECD), “Measuring OECD responses to illicit financial flows”, issue paper, DAC Senior Level Meeting, held in Paris on 3 and 4 April 2013, p. 3. See, for example, Clemens Fuest and Nadine Riedel, “Tax evasion, tax avoidance and tax expenditures in developing countries: a review of the literature”, report prepared for the Department for International Development of the United Kingdom of Great Britain and Northern Ireland, Oxford University Centre for Business Taxation, p. vi. Available from r4d.dfid.gov.uk/pdf/outputs/ecodev/60670_taxevasionreportdfidfinal1906.pdf. See Peter Reuter and Edwin M. Truman, Chasing Dirty Money – The Fight against Money Laundering (Washington, D.C., Institute for International Economics, 2004), p. 12. Dev Kar and Brian LeBlanc, “Illicit financial flows from developing countries: 2002–2011” (Washington, D.C., Global Financial Integrity, 2013), p. ix. According to the European Network on Debt and Development (Eurodad), developing countries lose between €660 billion and €870 billion each year in illicit financial flows, mainly in the form of tax evasion by multinational companies. Eurodad, “Giving with one hand and taking with the other: Europe’s role in tax-related capital flight from developing countries 2013” (Brussels, 2013), p. 6. Kar and LeBlanc, “Illicit financial flows”, p. 8. Ibid., pp. ix and 10. 5