A Look Offshore: Unpacking the Routes of Misinvoicing in International Trade

Drawing upon evidence and insights from empirical studies in related fields, the paper aims to explore whether misinvoicing in international trade is reflected in cross-border bank accounts reported by offshore financial centers. Across various model specifications and a diverse array of datasets, this study finds no compelling evidence supporting this association. While the estimated relationships are generally positive, statistical significance varies across different misinvoicing proxies, all of which are subject to various data and methodological limitations. Given these important data constraints, further research is needed to better understand the potential links between offshore financial centers, international trade misinvoicing, and illicit financing.