Money Laundering and Its Impact on Wildlife
Every year, the illegal wildlife trade—which includes the smuggling, poaching, capture, and collection of endangered species and protected wildlife—threatens many animal species with extinction. Demand for rhino horn—which is more expensive than gold—resulted in
the extinction of Africa’s western black rhino in 2011.
Not only is illegal wildlife trade an environmental crime that has a devastating impact on the world’s biodiversity, but it is also a financial crime that generates vast revenues for criminal networks, who often have global reach. The elephant ivory market,
for example, is valued at $240 to $720 million, and the rhino market is valued between $91 and $698 million annually.
Globally, the illegal wildlife trade is a substantial business. Illegal wildlife trafficking generates up to $23 billion annually, making it the fourth-largest unlawful
international trade, after drugs, human trafficking, and arms smuggling.
Unfortunately, historically wildlife trafficking hasn’t been perceived as a severe offense, and it often goes unprosecuted. At the same time, international law enforcement and substantial resources are dedicated to fighting other major crimes, such as drug
and human trafficking and terrorist financing. As a result, criminals view wildlife trafficking as an enterprise that offers them relatively low risk for a high return. Highly organized crime networks often use wildlife trafficking to aid money laundering,
fraud, and corruption.
Wildlife trafficking is hard to detect for three reasons:
- Trade kingpins often own both legal and illegal businesses and conduct wildlife trafficking in the shadow of legitimate business operations, such as the trading of legal forest and agriculture products
- Most business is conducted in cash, creating a nearly invisible audit trail
- Companies used for trading are often anonymous shell companies, which makes it very hard to determine the owners’ identities
Financial Institutions Can Help Stop Wildlife Trafficking
Financial institutions can play a crucial role in ending the illegal wildlife trade. If poachers and traffickers can be prevented from laundering and moving their money, illegal trading of animals and derivatives will wane. To do this, financial institutions
can use the tools and experience they have gained fighting other serious crimes such as human trafficking and terrorist financing.
To start, financial institutions can collect ultimate beneficiary ownership (UBO) information on companies and screen beneficiary owners against negative news and lists of politically exposed persons (PEPs) and high-risk entities. For trade financing, banks
should screen listings of goods and services for dual-use products, and then screen business activities through a behavior detection process for high-risk countries, mismatches between contracts and shipping countries, and other anomalies. Any red flags should
be fully investigated. This type of contextual investigation that brings both internal and external data together can be a game-changer in the investigation of highly organized crimes.
Additional steps financial institutions can take include:
- Use machine learning to factor in past learning, increasing the efficiency of investigations
- Aggregate and distribute information that identifies risks
- Train branch tellers to better identify potentially suspicious transactions related to the illegal wildlife trade
Global organizations are acting as well. In 2012, the United Nations Office on Drugs and Crime (UNODC) developed the Wildlife and Forest Crime
Analytic Toolkit to help government agencies conduct comprehensive analyses of the strengths and weaknesses of preventive and criminal justice responses and other measures designed to curtail wildlife and forest crime nationally and internationally.
In addition, the Financial Action Task Force (FATF)—an international organization fighting money laundering, terrorist financing, and proliferation financing—has
committed to tackling financial flows linked to the illegal wildlife trade. The group has discussed the contributions and preliminary findings of a project that aims to analyze common supply chains and payment methods. Its final
guidance paper, which includes case studies from countries that have experience in investigating the financial flows from the illegal wildlife trade, was published in June 2020.
FATF has made it a priority to help countries go after the money involved in the illegal wildlife trade and identify and disrupt large criminal networks that profit from this crime. Public and private sector representatives to the FATF, including anti-money
laundering experts and wildlife experts, are coming together to share experiences about detecting and combatting the financial flows linked to the illegal wildlife trade.
These actions and others are encouraging. It is time to treat the illegal wildlife trade as not only a conservation crisis but also an international criminal enterprise that financial institutions can and should work to disrupt.