The Plunder of Sri Lanka Through Trade Misinvoicing

A Case Study on Sri Lanka-Thailand Trade

- By Gomi SENADHIRA

In March 2026, a Washington-based think tank, Global Financial Integrity (GFI), released its report on “Trade-Related Illicit Financial Flows in Developing Asia” for the 2013-2022 period. The report calculates the possible misappropriation of 20.51% of Sri Lanka’s total trade value through trade misinvoicing.

A calculation of Sri Lanka’s exports to Thailand in 2024, using the same GFI methodology, shows a possible misappropriation of 207% of the export value by Sri Lankan exporters and Thai importers.

The phrase "plunder of Sri Lanka" normally refers to resource extraction through violent foreign invasions with swords and guns. This article is not about them. This article focuses on a more discreet and genteel version of plunder through illicit financial flows and the stashing of foreign exchange earnings offshore through trade misinvoicing.

Trade misinvoicing is the fraudulent recording of key invoice information for the purpose of facilitating illicit cross-border financial flows. One of the easiest ways to identify possible misinvoicing is the study of “mirror trade” data, that is, the comparative analysis of partner-country trade data with Sri Lankan trade data. If this flags discrepancies (value gaps), those are indicators of misinvoicing. These gaps could be due to overinvoicing imports, underinvoicing exports, or phantom imports.

Overinvoicing imports occurs when Sri Lankan importers and their foreign counterparts artificially inflate invoice prices for goods. The importer remits foreign currency abroad to settle the bogus invoice amount in full, and the surplus cash is subsequently split or retained in offshore accounts.