John S. Zdanowicz

Estimating the magnitude of capital flight due to abnormal pricing in international trade: The Russia–USA case

Abstract Governmental and international lending agencies, as well as private sector firms, who engage in international trade, have long been concerned with detecting and determining the magnitude of abnormal pricing in international trade. To detect such abnormal pricings, we present a framework analyzing millions of import/export transactions between the U.S. and Russia. The objectives of this study are to estimate the economic impact of over-invoiced/under-invoiced Russian imports/exports from/to the U.S. and to determine if capital movement/capital flight through trade is due to money laundering, tax evasion or some sort of portfolio consideration. Our results lead us to conclude that capital movement through trade in this case can be attributed to either money laundering and/or tax evasion.

Detecting money laundering and terrorist financing via data mining

Using import-export information to improve financial transaction security.

The impact of Switzerland's money laundering law on capital flows through abnormal pricing in international trade

The objective of this research is to determine the impact of Switzerlands money laundering law on the movement of money through false invoicing in international trade. This study evaluates every reported import and export transaction between the USA and Switzerland during the period 1995–2000. The study indicates that there were significant changes in the degree of abnormal international trade pricing subsequent to the enactment of Switzerlands antimoney laundering law. The study supports the view that individuals and companies will find substitute techniques and channels to launder money when central banking authorities enact legislation that only focuses on financial institutions.

Detecting abnormal pricing in international trade: the Greece-USA case

Government authorities, international lending agencies, and private sector firms try to detect abnormal pricing in international trade. Abnormal prices in international trade may indicate capital flight, import-duty fraud, income-tax evasion, or money laundering. We developed a framework for filtering all annual trades between two countries, which includes thousands of harmonized commodity codes and millions of import-export transactions. It produces a prioritized list of commodities traded at potentially abnormal prices and can help auditors to identify such items ranked according to likelihood of abnormal pricing. We estimated the economic impact of over invoiced imports to Greece from the United States and underinvoiced exports from Greece to the United States. These transactions shift as much as

BRAZIL-UNITED STATES TRADE: CAPITAL FLIGHT THROUGH ABNORMAL PRICING

400 million in income annually out of Greece to the US (and well over

Money Laundering and Income Tax Evasion: The Determination of Optimal Audits and Inspections to Detect Abnormal Prices in International Trade

5.5 billion out of Greece to all other countries or about four percent of the GDP of Greece), lowering the level of taxable income and the tax liability of firms operating in Greece, thus increasing the public deficit and reducing domestic investments. The treasury of Greece is losing an estimated

The Limitations of Diversification Return

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The Ethics of International Trade: Use of Deviation From Average World Price to Indicate Possible Wrongdoing

2 billion revenues annually from worldwide trade shifted income. By auditing only the top 25 income-shifting items with the US (identified through a pricing filter), the Greek treasury could capture about 3/4 of the income shifted from exports and over 1/2 of the income shifted from all imports.

The adjustment of stock prices to Wall Street journal corrections

Detailed analysis of the statistics of merchandise trade between Brazil and the United States reveals extensive underpricing of exports and overpricing of imports, which has the effect of transferring large amounts of money out of Brazil and into the United States. Previous studies called attention to this possibility without being able to demonstrate convincingly the extent and amount of the practice. This paper reports the results of a systematic investigation of U.S. customs data at its most disaggregate level to document the amount of capital flows which may be hidden in commodity trade. Using deviations from average prices within commodity classes to identify abnormal prices produces conservative estimates of the amount of capital flight from Brazil to the United States of between

Assessing the potential impact of abnormal pricing violations on state corporate tax receipts

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