In February, a team of journalists unveiled a tax evasion system used by the Swiss subsidiary of HSBC. From 2006 to 2007, roughly 100,000 clients secretly channeled over $100 billion through HSBC accounts. Of that, over $13 billion came from roughly 7,500 clients in Africa. Billions of dollars were channeled from Egypt, South Africa, and Morocco. But significant amounts also came from poorer countries such as Eritrea, the Democratic Republic of Congo, and Liberia. Recent leaks about tax evasion are just the
tip of the iceberg on Illicit Financial Flows. The UN estimates the cost of these flows in
Africa at $50 billion each year, more than the total amount of aid received by African
countries. This represents as much as 25% of GDP in some countries and if the illicit flows were curtailed, it would allow countries to meet their development goals significantly faster. The OECD and the G20 are currently advancing discussions on the automatic exchange of tax information considered the most efficient way to fight tax evasion. However, developing countries will need significant assistance before being able to implement the exchange.