Malaysia linked to world’s largest money laundering scheme, NYT reports

Why am I not surprised?

Wonder what more will this BN government do when Malaysia is at its worse point already.

I refer back to the 2 articles posted previously viz.



KUALA LUMPUR, May 29 ― Unlicensed money exchangers in Malaysia had aided the operators of a global currency exchange that ran a US$6 billion (RM18.33 billion) money-laundering operation online, a hub for criminals peddling in everything from stolen identities to child pornography, The New York Times (NYT) reported.

The currency exchange called Liberty Reserve is believed to be the world’s largest cyber money-laundering case and was based in the United States but operated well beyond the country’s borders as well as traditional international banking regulations, providing easy and anonymous cover increasingly sought by criminals to fund their activities, the widely-read daily reported, citing American law enforcement officers.

Liberty Reserve was responsible for laundering billions of dollars over the past seven years, conducting 55 million transactions that involved millions of customers around the world, including about 200,000 in the United States, according to US federal prosecutors who were reported to have announced the charges against the currency exchange in Manhattan yesterday.

According to NYT which cited the charges, Liberty Reserve’s system was designed to let people move sums large and small around the world just by setting up an email address, which did not require the user’s identity to even be validated.

Liberty Reserve also did not take or make cash payments directly but used “third-party ‘exchangers’” that “tended to be unlicensed money-transmitting businesses without significant government oversight or regulation, concentrated in Malaysia, Russia, Nigeria and Vietnam”.

Still citing from the charge sheet, the NYT reported that the “third-party exchangers” would take and make payments, and then credit or debit the Liberty Reserve account, allowing the latter to avoid collecting any banking information on its clients and not leave a “centralized financial paper trail.”

The people who accepted Liberty Reserve’s currency were “overwhelmingly criminal in nature,” according to the indictment as reported by the NYT.

“They included, for example: traffickers of stolen credit card data and personal identity information; peddlers of various types of online Ponzi and get-rich-quick schemes; computer hackers for hire; unregulated gambling enterprises; and underground drug-dealing Web sites,” the daily cited the charges as reading.

“As alleged, the only liberty that Liberty Reserve gave many of its users was the freedom to commit crimes — the coin of its realm was anonymity, and it became a popular hub for fraudsters, hackers and traffickers,” Preet Bharara, the United States attorney in Manhattan was quoted saying at the news conference in Manhattan yesterday.

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In Top 3 For illicit Capital Outflow

Malaysia ranks number three globally in terms of illicit capital outflow over a 10-year period from 2001 to 2010, according to a report released by the Washington-based Global Financial Integrity (GFI) on Monday.

A whopping US$285.24 billion (RM872.8 billion) of illicit outflow occurred in the country between 2001 and 2010, or an average of US$28.5 billion annually. An illicit outflow refers to a form of illegal capital flight and occurs when money is illegally earned, transferred or spent.

The GFI report said China and Mexico topped Malaysia during the 10-year period, with illicit outflows of US$2,740 billion and US$475.6 billion respectively
Other countries in the top 10 list were Saudi Arabia, Russia, the Philippines, Nigeria, India, Indonesia, and the United Arab Emirates.

According to the report, in 2010 Malaysia was the world’s number two in terms of illegal capital outflow with US$64.4 billion. China was in the top spot with US$420.4 billion.
The outflow of US$64.4 billion was the highest ever level for Malaysia in the 10-year period, an increase of 111.8% compared with the US$30.4 billion recorded in 2009. It was five times or 414% more than the outflow of US$12.54 billion recorded by Malaysia in 2002.

Malaysia’s capital flight has been increasing every year since 2002, except in 2009 when the outflow was US$7 billion lower than 2008.

The GFI report revealed that Asia was still the main driver of such flows, accounting for 61.2% of cumulative outflows. Five of the 10 countries with the largest illicit outflows — China, Malaysia, the Philippines, India, and Indonesia — are in Asia.

“The private sector in developing countries transfers illicit capital into the global shadow financial system through different channels, depending on the country of origin. For instance, while trade mispricing is the preferred method of sending illicit funds out of China, the balance of payments is the major channel for transferring unrecorded capital from oil exporters such as Nigeria, the Russian Federation, Saudi Arabia and Indonesia.

“Mexico and Malaysia are the only oil exporters where trade mispricing is the preferred method of transferring illicit capital abroad,” the report noted.

Interestingly, Prime Minister Datuk Seri Najib Razak last year gave Parliament a lower outflow figure of RM135.3 billion from 2000 to 2009. The GFI report, however, put Malaysia’s illicit outflow at US$220.84 billion for the 2001-2009 period.

The GFI, launched in September 2006, receives funding from the Ford Foundation, the Task Force on Financial Integrity & Economic Development and various individual donors.

Centre for Policy Initiatives director Dr Lim Teck Ghee said the findings are not surprising given the prevalence of high-level corruption in Malaysia, as well as its elevated position in global corruption ranking.

“Illicit outflows are so large because of the tremendous amount of financial gains related to kickbacks, corruption and other illegal means,” he said.

He also noted that it is alarming that Malaysia belongs to the same league as China.

“Our population and national output of goods and services are many times smaller than China’s. Hence, for us to belong to the same league as China in terms of absolute size of illicit outflows is an alarming indicator of the extent of financial pillage taking place,” he added.

He pointed out that there was also little enforcement to curb such practices. “There isn’t even any interest in the government to pursue the matter. In January 2011, an offer was made by a senior staff member of GFI to assist Bank Negara Malaysia and the government to look into the outflows and to see how they can be prevented, but it appears that the offer has been completely ignored,” he said.

RHB Research Institute executive director and economist Lim Chee Sing said it is not unusual for developing countries to experience illegal capital outflow.

“While it is hard to ascertain the actual figures, I believe illegal practices of capital being siphoned off do happen. During the Asian financial crisis in 1997/98, there were reports of people trying to take capital out illegally but we don’t hear much of this today,” he told The Edge Financial Daily.

An executive with a local stockbroking firm said it is not unusual for local companies to transfer prices via inter-company transactions to evade taxes. “Such practices are common even for foreign companies with operations in Malaysia, so they can avoid paying higher taxes to the government. As to how much capital has escaped taxes, I think it is quite difficult to track,” he noted.

Nevertheless, he pointed out that the estimated outflow of US$285 billion from Malaysia over 10 years was a startling figure. “If it is true, the figure is very high even for an exporting nation such as Malaysia. Consider Singapore which has a higher volume of exports, but it is not on the list,” he said.

He opined that the lack of illegal capital outflow in Singapore could be attributed to the stronger capital governance laws there.


G.F.I – New Report Finds Crime, Corruption, and Tax Evasion at Near-Historic Highs in 2010

Illicit Financial Outflows Cost Developing World $859 Billion in 2010, Rebounding Rapidly from Financial Crisis

Nearly $6 Trillion Stolen from Poor Countries in Decade between 2001 and 2010

December 17, 2012
Clark Gascoigne, +1 202 293 0740 x222

WASHINGTON, DC – Crime, corruption, and tax evasion cost the developing world $858.8 billion in 2010, just below the all-time high of $871.3 billion set in 2008—the year preceding the global financial crisis. The findings are part of a new study released today by Global Financial Integrity (GFI), a Washington-based research and advocacy organization.

The report, “Illicit Financial Flows from Developing Countries: 2001-2010,” is GFI’s annual update on the amount of money flowing out of developing economies via crime, corruption and tax evasion, and it is the first of GFI’s reports to include data for the year 2010.

Co-authored by GFI Lead Economist Dev Kar and GFI Economist Sarah Freitas, the study is the first by GFI to incorporate a new, more conservative, estimate of illicit financial flows, facilitating comparisons with previous estimates from GFI updates.

» Go to the report…
“Astronomical sums of dirty money continue to flow out of the developing world and into offshore tax havens and developed country banks,” said GFI Director Raymond Baker. “Regardless of the methodology, it’s clear: developing economies are hemorrhaging more and more money at a time when rich and poor nations alike are struggling to spur economic growth. This report should be a wake-up call to world leaders that more must be done to address these harmful outflows.”


As developing countries begin to loosen capital controls, the possibility exists that the methodology utilized in previous GFI reports—known as the World Bank Residual Plus Trade Mispricing method—could increasingly pick-up some licit capital flows. The methodology introduced in this report— the Hot Money Narrow Plus Trade Mispricing method—ensures that all flow estimates are strictly illicit moving forward, but may omit some illicit financial flows detected in the previous methodology.

“The estimates provided by either methodology are still likely to be extremely conservative as they do not include trade mispricing in services, same-invoice trade mispricing, hawala transactions, and dealings conducted in bulk cash,” explained Dr. Kar, who previously served as a senior economist at the International Monetary Fund. “This means that much of the proceeds of drug trafficking, human smuggling, and other criminal activities, which are often settled in cash, are not included in these estimates.”


The $858.8 billion of illicit outflows lost in 2010 is a significant uptick from 2009, which saw developing countries lose $776.0 billion under the new methodology. The study estimates the developing world lost a total of $5.86 trillion over the decade spanning 2001 through 2010.1

“This has very big consequences for developing economies,” explained Ms. Freitas, a co-author of the report. “Poor countries lost nearly a trillion dollars that could have been used to invest in healthcare, education, and infrastructure. It’s nearly a trillion dollars that could have been used to pull people out of poverty and save lives.”

Dr. Kar and Ms. Freitas’ research tracks the amount of illegal capital flowing out of 150 different developing countries over the 10-year period from 2001 through 2010, and it ranks the countries by magnitude of illicit outflows. According to the report, the 20 biggest exporters of illicit financial flows over the decade are:

1.China ……………. $274 billion average ($2.74 trillion cumulative)
2.Mexico ………….. $47.6 billion avg. ($476 billion cum.)
3.Malaysia ………… $28.5 billion avg. ($285 billion cum.)
4.Saudi Arabia …….. $21.0 billion avg. ($210 billion cum.)
5.Russia ………….. $15.2 billion avg. ($152 billion cum.)
6.Philippines ……… $13.8 billion avg. ($138 billion cum.)
7.Nigeria …………. $12.9 billion avg. ($129 billion cum.)
8.India …………… $12.3 billion avg. ($123 billion cum.)
9.Indonesia ……….. $10.9 billion avg. ($109 billion cum.)
10.United Arab Emirates ……. $10.7 billion avg. ($107 billion cum.)
11.Iraq ………………….. $10.6 billion avg. ($63.6 billion cum.)2
12.South Africa …………… $8.39 billion avg. ($83.9 billion cum.)
13.Thailand ………………. $6.43 billion avg. ($64.3 billion cum.)
14.Costa Rica ……………. $6.37 billion avg. ($63.7 billion cum.)
15.Qatar ………………… $5.61 billion avg. ($56.1 billion cum.)
16.Serbia ………………… $5.14 billion avg. ($51.4 billion cum.)
17.Poland ………………… $4.08 billion avg. ($40.8 billion cum.)
18.Panama ………………… $3.99 billion avg. ($39.9 billion cum.)
19.Venezuela ……………… $3.79 billion avg. ($37.9 billion cum.)
20.Brunei ………………… $3.70 billion avg. ($37.0 billion cum.)

For a complete ranking of average annual illicit financial outflows by country, please refer to Table 2 of the report’s appendix on page 36, or download the rankings by average annual illicit outflows here [PDF | 51 KB].

Also revealed are the top exporters of illegal capital in 2010, which were:

1.China ……………………. $420.36 billion
2.Malaysia …………………. $64.38 billion
3.Mexico …………………… $51.17 billion
4.Russia …………………… $43.64 billion
5.Saudi Arabia ……………… $38.30 billion
6.Iraq……………………… $22.21 billion
7.Nigeria ………………….. $19.66 billion
8.Costa Rica………………… $17.51 billion
9.Philippines ………………. $16.62 billion
10.Thailand………………….. $12.37 billion
11.Qatar ……………………. $12.36 billion
12.Poland …………………… $10.46 billion
13.Sudan ……………………. $8.58 billion
14.United Arab Emirates ………. $7.60 billion
15.Ethiopia …………………. $5.64 billion
16.Panama …………………… $5.34 billion
17.Indonesia ………………… $5.21 billion
18.Dominican Republic ………… $5.03 billion
19.Trinidad and Tobago ……….. $4.33 billion
20.Brazil …………………… $4.29 billion

An alphabetical listing of illicit financial outflows is available for each country in Table 9 on pg. 62 of the report. You can also download the alphabetical listing of illicit financial flows data for each country here [PDF | 64 KB].

Connections to Previous GFI Studies

China, the largest cumulative exporter of illegal capital flight, as well as the largest victim in 2010, was the topic of an October 2012 country-specific report by GFI’s Kar and Freitas. Using the older methodology, “Illicit Financial Flows from China and the Role of Trade Misinvoicing,” found that the Chinese economy suffered $3.79 trillion in illicit financial outflows between 2000 and 2011.

“Our reports continue to demonstrate that the Chinese economy is a ticking time bomb,” said Dr. Kar. “The social, political, and economic order in that country is not sustainable in the long-run given such massive illicit outflows.”

Mexico, the second-largest cumulative exporter of illicit capital over the decade, was also the topic of a January 2011 GFI report by Dr. Kar. The study, “Mexico: Illicit Financial Flows, Macroeconomic Imbalances, and the Underground Economy,” found that Mexico lost a total of $872 billion in illicit financial flows over the 41-year period from 1970 to 2010. Moreover, illicit outflows were found to drive Mexico’s domestic underground economy, which includes—among other things—drug smuggling, arms trafficking and human trafficking.

Possible Solutions

Global Financial Integrity advocates that world leaders increase the transparency in the international financial system as a means to curtail the illicit flow of money highlighted by Dr. Kar and Ms. Freitas’ research. Policies advocated by GFI include:

Addressing the problems posed by anonymous shell companies, foundations, and trusts by requiring confirmation of beneficial ownership in all banking and securities accounts, and demanding that information on the true, human owner of all corporations, trusts, and foundations be disclosed upon formation and be available to law enforcement;
Reforming customs and trade protocols to detect and curtail trade mispricing;
Requiring the country-by-country reporting of sales, profits and taxes paid by multinational corporations;
Requiring the automatic cross-border exchange of tax information on personal and business accounts;
Harmonizing predicate offenses under anti-money laundering laws across all Financial Action Task Force cooperating countries; and
Ensuring that the anti-money laundering regulations already on the books are strongly enforced.


Funding for the new report, “Illicit Financial Flows from Developing Countries: 2001-2010,” was generously provided by the Ford Foundation.

To schedule an interview with GFI spokespersons on this report, contact Clark Gascoigne at +1 202 293 0740, ext. 222 or On-camera spokespersons are available in Washington, DC.



The less conservative, methodology used in previous GFI updates measured $936.1 billion in 2009. Were the previous methodology applied to 2010, it would have measured $1.138 trillion in illicit outflows from the developing world, a 26 percent increase over the previous year. Table 11 on pg. 70 provides a breakdown of illicit financial flow estimates for each country based on the original methodology.
Data for Iraq was not available in 2001-2004, thus the average illicit outflows of US$10.6 billion reflect only the years 2005-2010. Likewise, the cumulative outflows of US$63.6 billion for Iraq are cumulative outflows for 2005 through 2010 only.

Notes to Editors:

More information about the GFI report is available on the GFI website here. A PDF of the full report can be downloaded here [PDF | 3.3 MB]. An “Explore” page, complete with an interactive heat-map, and .zip files of the report’s data is available here.
A tip-sheet for journalists can be downloaded here [PDF | 222 KB].
A PDF with full country rankings by average annual illicit financial outflows is available here [PDF | 51 KB].
An alphabetical listing of total illicit financial flows data for each country each year is available here [PDF | 64 KB].
A separate press release for Indian journalists is available here.
All monetary values are listed in US dollars (USD).


Clark Gascoigne
+1 202 293 0740, ext. 222

EJ Fagan
+1 202 293 0740, ext. 227


Global Financial Integrity (GFI) is a Washington, DC-based research and advocacy organization which promotes transparency in the international financial system.

For additional information please visit

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Cut yourself a Muscle Tank

I bumped into a blogsite and I find so interesting that I did it myself too. Now, I love the new Muscle Tank cut shirt I have.


Now you know how it’s being done. Perhaps you could check this video for assurance and choices.

Just skip to minute 5:05

Here are a few examples of the photo featuring fitness models.



Sources from