It’s not just drugs and arms that are trafficked to make billions of illegal dollars for the powerful criminal networks around the world. The Illegal Wildlife Trade (IWT) is also big business with all sorts of animals – from elephants and rhinos to turtles and pangolins – generating tidy profits.
The figures are staggering, if hard to estimate. To give an example, according to the 2020 World Wildlife Crime Report from the UN Office on Drugs and Crime ‘the annual illicit income generated from ivory and rhino horn trafficking between 2016 and 2018 was estimated at US$400 million for ivory and US$230 million for rhino horn trafficking.’ Due to its links to other forms of illegal activity, in particular money laundering, IWT has shifted from being a niche concern for environmentalists to attracting the attention of governments and financial organisations. And they are facing a relentless fight against a crime that is vast in scope.
A case in point, the Financial Action Task Force (FATF), the global money laundering and terrorist financing watchdog, recently produced a report Money Laundering and the Illegal Wildlife Trade highlighting the inextricable link between both. The FATF states that ‘The illegal wildlife trade (IWT) is a major transnational organised crime, which generates billions of criminal proceeds each year. IWT fuels corruption, threatens biodiversity, and can have a significant negative impact on public health and the economy. To move, hide and launder their proceeds, wildlife traffickers exploit weaknesses in the financial and non-financial sectors, enabling further wildlife crimes and damaging financial integrity. Despite this, jurisdictions rarely investigate the financial trail left by this crime.’
While it is difficult to put a figure on the value of the IWT, the FATF has estimated it at anywhere between $7billion and $23billion per year. Criminals receive payments from wildlife trafficking activities in cash and then wash the illicit funds through anonymous shell companies which are relatively easy to set up and manage and often pass under the radar of scrutiny. The waters are muddied as legitimate business is conducted alongside the illegal activity. New technologies such as mobile apps and prepaid cards have also played a part in making it easier for money originating from wildlife crimes to be laundered.
To date, IWT has been perceived as a low-risk crime which offers high rewards. The FATF is calling for change to crack down on corruption and reduce the demand for trafficked wildlife by ‘following the money’. It sees an increase in financial investigations and money laundering charges as crucial to effectively combatting IWT and is calling for strengthened laws and policies on a national level as well as increased international cooperation. It points out that IWT is an issue which does not only affect those countries where wildlife is illegally sold but represents a global threat which requires a global solution.
The advantages of tackling the issue of wildlife trafficking from a financial perspective, in parallel with addressing the wildlife crime itself, are numerous. Normally the bosses involved in this activity are involved in many other areas of criminality so identifying and penalising them damages their much broader networks, reducing crime, corruption and fraud overall. Additionally the penalties for money laundering are higher than for wildlife crimes so this could act as a disincentive.
The report targets four areas of action to address with the aim of reducing IWT:
- Risk Understanding, National Policies and Legislation including an assessment of money laundering risk as well as adjacent crimes related to IWT such as bribery and customs fraud by all countries, the provision of adequate resources to address the issues and legislation to enable information sharing.
- Financial Investigations to be carried out in tandem with criminal investigations into IWT whenever possible.
- International cooperation including more proactive engagement and regular dialogue, cross-border information sharing and the implementation of international conventions such as the UN Convention on Transnational Organized Crime (UNTOC) and the UN Convention Against Corruption (UNCAC).
- Private Sector Supervision and Public-Private Collaboration – all relevant institutions, both financial and non-financial should identify and assess their exposure to money laundering risk related to IWT, take appropriate mitigating measures and report suspicious activities. Dialogue between the public and private sectors is vital.
The illegal wildlife trade poses a threat not only to the world’s most at risk species, the climate and biodiversity but also to economies, businesses and society as a whole due to the illicit financial flows which result from it. It remains to be seen whether international cooperation and a concerted effort by governments, financial institutions and private businesses can succeed in stamping out this devastating criminal activity.
I have over 20 years of experience in the financial services industry and hold a Chartered MCSI qualification. I ensure that our operations are fully compliant with the rules of our most stringent regulators.
