REPORTING FROM MEXICO CITY -- The Mexican economy is "hemorrhaging" billions of dollars annually because of money laundering, tax evasion and other forms of corruption, a new study has found.

Mexico lost $872 billion between 1970 and 2010, the Washington-based advocacy organizationGlobal Financial Integrity said in an 80-page report released Monday. That averages a whopping 5.2% of gross domestic product, the group said.

“This is an enormously damaging reality for emerging markets and developing countries ... an enormously damaging drainage of resources," the group's director, Raymond W. Baker, said at  a news conference.

It is money that could have been used to invest in education, to build roads or to fight the drug cartels, he noted, in a country with one of the largest gaps between rich and poor. "The negative ramifications are huge for everyday Mexicans,” he said.

One of the most common ways for money to flow illegally out of Mexico is trade manipulation or incorrect pricing, Baker said, when companies or individuals falsify invoices and undervalue or overvalue exports or imports. The Times recently reported that "trade-based" money laundering was fast becoming a favored method of powerful drug cartels.

"Trade-based laundering takes advantages of blind spots in international commerce," The Times said. "And the huge, and growing, volume of legitimate trade between Mexico and the U.S. — now nearly $400 billion a year — makes it extraordinarily hard to detect."

In its report, Global Financial Integrity said illicit cash outflows from Mexico soared after the 1994 North American Free Trade Agreement, or NAFTA, went into effect -- from an annual average in the 1980s of $10 billion to $50 billion after 2000.

"NAFTA freed up trade," Baker said. "But it also freed up the opportunity to abuse trade."

http://latimesblogs.latimes.com/world_now/2012/01/money-laundering-...